Global private markets investor Partners Group has closed its fourth private equity buyout program with total commitments of $US15 billion ($20.7 billion).
Investments from the program are expected to be made in Australia and New Zealand, possibly including some very large investments. Last year Partners Group was unsuccessful with a $2bn-plus bid for an Australian listed company.
Announcing the close on 21 September, the Switzerland-based firm (SWX: PGHN) said the program had attracted a mix of new and existing investors including public sector and corporate pension plans, sovereign wealth funds, insurance companies, endowment funds and foundations.
Australian institutional investors have previously allocated to Partners Group and it is likely some have committed to this raising.
The buyout program is anchored by Partners Group’s fourth flagship direct equity fund, which raised $US6 billion, and includes $US9 billion committed via other private markets programs plus client mandates that will be invested alongside the fund.
Partners Group said existing investors anchored fundraising for the flagship fund committing more than the total raised for the predecessor fund. Partners Group’s founders, partners and other employees, together with affiliates of the firm, also made substantial commitments to the direct equity fund. In-house investors have now committed a total of more than $US3 billion to the firm’s investment programs since Partners Group was established in 1996.
Chief executive and head of private equity David Layton said the successful close of the fourth buyout program illustrated global investor interest in Partners Group’s investment strategy.
“As investors, we seek not only to generate long-term sustainable returns for our clients but also to create lasting positive impact for all our stakeholders,” he said.
The program is investing globally with a focus on mid-market companies across four industry verticals: goods and products, health and life, services and technology. Across these verticals, Partners Group is using its internally developed research approach to track up to 60 thematics. These thematics are based on the overarching themes of digitisation and automation, new living and decarbonistation.
Managing director, private equity, Todd Miller, said: “We work to identify transformative industry trends and then drill down to find the companies with the strongest potential to benefit from them – our aim is to help tomorrow’s winners realise their potential. To drive growth, we apply entrepreneurial governance to build high-performing boards and work together with management teams on targeted value creation initiatives.”
Partners Group’s fourth direct equity fund has already committed investment to 17 companies, each of which, it says, are leaders in their respective fields. These include Blue River Petcare, a US operator of veterinary hospitals for companion animals; Axia Women’s Health, a US healthcare provider; Rovensa, a Portugal-based manufacturer of specialty crop nutrition, protection and biocontrol products; Pharmathen, a European pharmaceutical company specialising in advanced drug delivery technologies; and Econ Express, one of the India’s largest providers of technology-enabled end-to-end e-commerce logistics.
Partners Group’s Asian regional headquarters is in Singapore and its Australia and New Zealand office is in Sydney. Infrastructure, real estate, debt and direct private equity teams are based at the Sydney office.
In its direct private equity investing in Australia and New Zealand, Partners Group has mainly focused on mid-market opportunities, such as its controlling stake in Guardian Early Learning Group (now Guardian Childcare and Education) acquired from Navis Capital Partners in 2016 on an enterprise value of $440 million. But the firm has the capacity to make much larger investments. Last year, it made a $2.1 billion indicative offer for healthcare company Healius (ASX: HLS) which was rejected.
Partners Group is also believed to be a limited partner (LP) investor in Australian mid-market private equity funds and has acquired secondary private equity assets locally.
Partners Group’s third direct equity fund is a 2016 vintage vehicle which achieved a final close in 2017. The fund currently has a net internal rate of return (IRR) of 22% and a net total value to paid in (TVPI) capital ratio of 1.95x.
Recent Partners Group exits include the sales of investments in US digital engineering services company GlobalLogic to Hitachi for an enterprise value of $US9.5 billion; and of PCI Pharma, a US-based global provider of outsourced pharmaceutical services for an undisclosed sum.
In December last year, private markets research business Preqin named Partners Group as “the most consistent top-performing globally diversified buyout fund manager with a fund in market”. This was included in a report on the fund performance of the largest global buyout firms since the global financial crisis.
Partners Group’s private equity business has received A+ scores for responsible investment strategy and governance from UN PRI for six consecutive years.
Image: Partners Group has focused on mid-market direct private equity opportunities in Australian and New Zealand to date such as Guardian Childcare and Education.