Potential benefits of secondaries
A key potential benefit of a private equity strategy focused on secondaries is its potential to provide an enhanced liquidity profile compared to a primary-focused strategy. Because secondary investors enter after the investment period is complete, the underlying portfolio is much closer to the point of realization. This typically allows investors to mitigate the J-curve and shorten the duration of their investment.
Pomona enhanced liquidity
Pomona typically purchases seasoned funds well into their 10-year life cycle whose commitments are generally 70–90% called. Pomona manages the Pomona Investment Fund (PIF) portfolio to receive cash distributions as the more mature assets are realized, while also adding younger assets to the portfolio that are expected to enter the growth phase. This maturity profile has led to an enhanced liquidity profile and, in our view, puts PIF in a strong position to comfortably meet its outstanding commitments and to nimbly respond to new investment opportunities.
29% Average annual portfolio liquidity1 (as % of NAV)
9% Average annual distribution2 to shareholders (as % of NAV)
Notable liquidity events
Below is a list of articles that discuss recent liquidity events related to portfolio companies in which PIF invests through its private equity holdings. Please refer to the recent headlines and corresponding links below for more information on these liquidity events.
Blackstone firm Aadhar Housing Finance unveils ₹3,000-crore IPO
Blackstone-promoted Aadhar Housing Finance Ltd., an affordable housing lender, announced its ₹3,000 crore initial public offering (IPO) of equity shares on Wednesday (May 8). The price band had been fixed at ₹300–₹315 per equity share of a face value of ₹10 each. Bids closed on Friday (May 10). Bids could be made for a minimum of 47 equity shares in multiples of 47 shares thereafter.
The IPO comprised a fresh issue of ₹1,000 crore and an offer for sale aggregating up to ₹2,000 crore by BCP Topco VII Pte. Ltd., which was the Promoter Selling Shareholder.
The company proposed to utilize the net proceeds from the fresh issue to meet future capital requirements towards onward lending and general corporate purposes.
Triton to sell SEDIVER parent company SEVES Group to Blackstone
Funds advised by Triton have signed an agreement to sell SEVES Group S.à r.l., the parent company of SEDIVER Group, a provider of specialized electrical glass insulator solutions for the high-voltage transmission grid, to Blackstone. The terms of the transaction, which marked Triton’s complete divestment from the SEVES Group, were not disclosed.
As the world’s leading manufacturer of toughened glass insulators, SEDIVER supplies a mission-critical element of the electric transmission grid. The company supports the energy transition by enabling the reliable and sustainable transmission of electricity, while facilitating the global electrification megatrend. SEDIVER´s products are critical to the modernization of the electrical grid in developed economies, while powering the new build-out of grid systems in emerging markets around the world.
Major European glass recycler to buy Strategic Materials
Sibelco, a post-consumer glass recycling firm with two dozen processing plants across Europe, announced plans to buy U.S. glass recycling giant Strategic Materials, which recently reorganized through Chapter 11 bankruptcy.
Belgium-headquartered Sibelco on April 23 announced it signed a “definitive agreement” to acquire Strategic, a major downstream outlet for U.S. MRFs and container deposit programs. Strategic buys mixed post-consumer glass, including container glass, and at its three dozen U.S. processing facilities, cleans and sorts the material to produce cullet for manufacturing. The company processes more than 2 million short tons of glass per year.
Strategic had been owned by private equity firm Littlejohn & Co. since 2017.
Leonard Green & Partners and Berkshire Partners Complete Sale of SRS Distribution for $18.25 Billion
Leonard Green & Partners and Berkshire Partners today announced the closing of the sale of SRS Distribution Inc. a distributor of residential and commercial building products in the United States, to The Home Depot for $18.25 billion. The acquisition was previously announced on March 28, 2024.
Berkshire Partners invested in SRS in 2013 and sold a majority stake in the business to Leonard Green & Partners in 2018. Both firms played a key role in supporting the growth of SRS, including entering multiple new trade verticals and the expansion of SRS branches across the country.
Since the company’s inception, SRS has prioritized broad-based equity incentives and ownership to create meaningful financial opportunities for its employees. These initiatives had the full support of Leonard Green & Partners and Berkshire Partners, who are both members of Ownership Works, a nonprofit organization that partners with companies and investors to provide all employees with the opportunity to build wealth through their career.
Atlas Energy Solutions Inc. announced the completion of the acquisition of Hi-Crush Inc. The transaction strengthens Atlas’s position as the largest proppant producer in the country, with a total combined annual production capacity of ~28 million tons per year, and an industry leading provider of proppant logistics in the Permian Basin. This acquisition brings together two of the leading innovators in the Permian proppant space and broadens Atlas’s logistics offering through the addition of Pronghorn, a leading multi-basin provider of proppant logistics and wellsite services. The combined logistics offerings are expected to drive significant operational efficiencies.
Hi-Crush Inc., together with its subsidiaries, is a fully integrated provider of proppant and logistics services for hydraulic fracturing operations, offering frac sand production, advanced wellsite storage systems, flexible last mile services, and innovative software for real-time visibility and management across the entire supply chain. Hi-Crush’s strategic suite of solutions provides U.S. oil and gas operators and service companies with the ability to build safety, reliability, and efficiency into every completion. Clearlake Capital Group L.P. and Whitebox Advisors LLC are the controlling shareholders of Hi-Crush Inc.
Risk of investing Discussed below are the investments generally made by Investment Funds and the principal risks that the Adviser and the Fund believe are associated with those investments and with direct investments in operating companies. These risks will, in turn, have an effect on the Fund. In response to adverse market, economic or political conditions, the Fund may invest in investment grade fixed income securities, money market instruments and affiliated or unaffiliated money market funds or may hold cash or cash equivalents for liquidity or defensive purposes, pending investment in longer-term opportunities. In addition, the Fund may also make these types of investments pending the investment of assets in Investment Funds and Co-Investment Opportunities or to maintain the liquidity necessary to effect repurchases of Shares. When the Fund takes a defensive position or otherwise makes these types of investments, it may not achieve its investment objective. The value of the Fund’s total net assets is expected to fluctuate in response to fluctuations in the value of the Investment Funds, direct investments and other assets in which the Fund invests. An investment in the Fund involves a high degree of risk, including the risk that the Shareholder’s entire investment may be lost. The Fund’s performance depends upon the Adviser’s selection of Investment Funds and direct investments in operating companies, the allocation of offering proceeds thereto, and the performance of the Investment Funds, direct investments, and other assets. The Investment Funds’ investment activities and investments in operating companies involve the risks associated with private equity investments generally. Risks include adverse changes in national or international economic conditions, adverse local market conditions, the financial conditions of portfolio companies, changes in the availability or terms of financing, changes in interest rates, exchange rates, corporate tax rates and other operating expenses, environmental laws and regulations, and other governmental rules and fiscal policies, energy prices, changes in the relative popularity of certain industries or the availability of purchasers to acquire companies, and dependence on cash flow, as well as acts of God, uninsurable losses, war, terrorism, earthquakes, hurricanes or floods and other factors which are beyond the control of the Fund or the Investment Funds. Unexpected volatility or lack of liquidity, such as the general market conditions that prevailed in 2008, could impair the Fund’s performance and result in its suffering losses. The value of the Fund’s total net assets is expected to fluctuate. To the extent that the Fund’s portfolio is concentrated in securities of a single issuer or issuers in a single sector, the investment risk may be increased. The Fund’s or an Investment Fund’s use of leverage is likely to cause the Fund’s average net assets to appreciate or depreciate at a greater rate than if leverage were not used. The Fund is a non-diversified, closed-end management investment company with limited performance history that a Shareholder can use to evaluate the Fund’s investment performance. The Fund may be unable to raise substantial capital, which could result in the Fund being unable to structure its investment portfolio as anticipated, and the returns achieved on these investments may be reduced as a result of allocating all of the Fund’s expenses over a smaller asset base. The initial operating expenses for a new fund, including start-up costs, which may be significant, may be higher than the expenses of an established fund. The Investment Funds may, in some cases, be newly organized with limited operating histories upon which to evaluate their performance. As such, the ability of the Adviser to evaluate past performance or to validate the investment strategies of such Investment Funds will be limited. In addition, the Adviser has not previously managed the assets of a closed-end registered investment company. Closed-End Fund; Liquidity Risks. The Fund is a non-diversified closed-end management investment company designed principally for long-term investors and is not intended to be a trading vehicle. An investor should not invest in the Fund if the investor needs a liquid investment. Closed-end funds differ from open-end management investment companies (commonly known as mutual funds) in that investors in a closed-end fund do not have the right to redeem their shares on a daily basis at a price based on net asset value. |