European LP News, January 2011

Apax Bid Could Depend On LPs

Apax Partners is in talks to acquire the Danish cleaning and catering group ISS and, if successful, could find itself having to tap some of its sovereign wealth funds and other big investors.

London-based Apax fought off competition from rival firms, including The Blackstone Group and Apollo Management, to secure two weeks of exclusive talks with ISS owners Goldman Sachs and EQT, part-owned by Sweden’s Wallenberg family.

The purchase could be worth $8.5 billion. But with Apax limited to a $1 billion investment, the firm would likely turn to its limited partners, which includes sovereign wealth funds China Investment Corp., Singapore’s GIC and Australia’s Future Fund, and other large institutional investors, such as AlpInvest in the Netherlands and the Washington State Investment Board in the United States.

Norwegian LP Hesitant On Private Equity

The Norwegian Government Pension Fund, the world’s second-largest sovereign wealth fund, has been advised to accept more risk.

But the $500 billion institution also was urged to favor infrastructure investments over private equity, dashing hopes across Europe of a new, more active LP.

“We are … reserved about the benefits to the fund of investing in private equity,” said the government-commissioned report, chaired by Elroy Dimson, professor of finance at the London Business School.

ATP Revs Up Venture Efforts

Denmark’s ATP is setting up a second DKK1 billion ($177 million) venture capital fund to target growth companies.

Via Venture Partners Fond II will allocate up to DKK150 million per business to Danish and other Nordic IT and telecommunications companies. ATP launched its first venture fund in 2006 and the fund is fully invested across 20 companies.

“The venture capital market has been a difficult one to crack, but we have developed a model which, in our opinion, will ensure a healthy return in future,” said Bjarne Graven Larsen, ATP’s chief investment officer, in a statement.

Candover to Sell Fund, Share of Portfolio

Candover Partners agreed to sell its troubled fund for a “nominal consideration” to Arle Capital Partners as a first step toward returning cash to investors.

Arle, a new partnership formed by many of Candover’s own investment managers, and Pantheon Ventures, a Candover investor, also will buy 29% of the Candover portfolio for £60 million ($90 million), a 14% discount on the £70 million ($109 million) carrying value of the assets.

Proceeds from the portfolio sale will be used to lower Candover’s debt and reduce the firm’s funding liabilities. Candover plans to return cash to shareholders, but not before the company is in a net cash position.

Compiled by Alex Derber