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 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.
27% Average annual portfolio liquidity1 (as % of NAV)
8% 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.
Apax X sells stake in Spanish real estate platform to private equity firm Cinven
The Apax X Fund, backed by investment trust Apax Global Alpha (AGA), sold its minority stake in idealista, a Spanish online real estate classifieds platform, to private equity firm Cinven.
AGA values its look-through investment in idealista at around €14.8m (£12.6m), marking an uplift of roughly 9.6% to its last unaffected valuation and an uplift of some €1.3m (£1.1m) in Apax’s adjusted net asset value as of 03/31/24.
Founded in 2000, Madrid-based idealista provides an online real estate classifieds marketplace for homebuyers and sellers. It claims to connect around 60,000 real estate agents with more than 38 million unique monthly visitors, generating over one billion visits annually across southern Europe.
Kano Laboratories switches sponsors
Gryphon Investors completed the sale of Kano Laboratories, a producer of branded oils and lubricants that it acquired in November 2020, to L Squared Capital Partners.
Kano Laboratories specializes in products designed for industrial maintenance, repair and operations (MRO). The company was founded in 1939 and is headquartered in Nashville.
Kano’s flagship Kroil brand is used to loosen rusted or corroded bolts, valves and mechanical parts, reducing downtime in industrial facilities. Additional products include AeroKroil, a quick-penetrating aerosol lubricant; Microil, designed for precision equipment; and Penephite, a high-performance graphite lubricant for extreme environments. The company also offers Super Lube synthetic lubricants that are used in applications requiring food-grade safety such as pharmaceutical and food processing equipment.
Healthcare payments tech company Waystar hits the public market, raising $968M
Healthcare payment software maker Waystar debuted on the public market, raising $967.5 million, and marking the biggest health tech IPO since 2022.
The Lehi, Utah-based company’s initial public offering priced at $21.50 a share, in the middle of its expected range. Waystar, backed by EQT AB and the Canada Pension Plan Investment Board (CPPIB), sold 45 million shares.
Bain Capital also is a major shareholder in the company. Following the IPO, EQT, CPPIB and Bain will beneficially own approximately 29.2%, 22.3%, and 16.8%, respectively.
International private equity firm, Cinven agreed to sell JAGGAER, a global integrated direct and indirect enterprise procurement and supplier collaboration, to Vista Equity Partners. Financial details of the transaction were not disclosed.
JAGGAER has been a strategic partner to enterprise customers across the globe since 1995 and today serves over 1,400 customers across more than 55 countries and a wide range of sectors including manufacturing, higher education and research institutes, the public sector, energy, services, and consumer and retail. Providing an intelligent, comprehensive and integrated platform, JAGGAER helps companies automate and manage their supply chain. JAGGAER One, the Company’s proprietary software as a service platform, is a holistic procurement and supplier collaboration platform that powers B2B commerce amongst buyers, suppliers, partners and community members.
Wafra closes acquisition of Aquila Air Capital
Wafra Inc. , a New York-based, global alternative asset manager, completed the acquisition of Engine lessor Aquila Air Capital (Aquila)’s platform from Warburg Pincus.
Wafra entered into a definitive agreement to acquire a controlling interest in Aquila on 10/18/24. Since then, Wafra has received all customary regulatory approvals to complete the transaction.
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. |