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 distribution2,3 to shareholders (as % of NAV)
Notable liquidity events
Below is a list of articles that discuss companies that were recently liquidated from the fund. Please refer to the recent headlines and corresponding links below for more information on these liquidity events.
TerraVest announces the acquisition of Entrans International and amended credit facility
TerraVest Industries Inc. announced the acquisition of EnTrans International–a premier North American manufacturer of tank trailers and transportation solutions.
Headquartered in Athens Tennessee, with additional manufacturing operations in Minnesota, Texas, Mexico, and Thailand, Entrans is a manufacturer of tank trailers, heavy haul trailers, and LPG transportation equipment under the Heil Trailer, Polar Tank Trailer, Kalyn Siebert, and Jarco brand names. The company serves mission-critical sectors, including petroleum, chemical, foodgrade, and cryogenic transport and has a reputation for engineering excellence.
Entrans was acquired for US$546 million at closing, plus contingent earn-out consideration based on the future financial performance of Entrans in the 12-month period following the date of acquisition of up to US$46 million. This represents TerraVest’s largest acquisition to date, with the purchase price representing a multiple of approximately 7.0x to Entrans’ trailing twelve-month EBITDA.
Carlyle-backed IT exporter Hexaware valued at $5 bn on market debut day
Shares of Carlyle-backed Hexaware Technologies rose as much as 10% in their trading, indicating rising retail interest in India’s first billion-dollar IPO that struggled to achieve full subscription without an outsized help from large institutions.
The stock began trading at Rs 745.50 on the National Stock Exchange, above its offer price of Rs 708. The blue-chip Nifty 50 index closed marginally lower.
“The IPO of Hexaware is a testimony to both the quality of the asset and the depth of the Indian capital markets,” said Amit Jain, managing director and head of India at US private equity firm Carlyle Group.
Institutional investors bid for nine times the shares on offer, while retail investors bid for only a tenth of the portion reserved for them amid market volatility and investor caution over the IT services sector.
RRD (R.R. Donnelley & Sons Company) announced Williams Lea will join RRD’s Digital, Creative and Business Support Services segment “to further strengthen and expand its position as a transformation partner for business support and productivity solutions”. It said the investment also complements the segment’s digital marketing capabilities that include a suite of full-funnel media, measurement, and proprietary marketing technology offerings. The deal was expected to close in the first quarter of 2025, pending regulatory clearance and customary closing conditions.
Williams Lea will maintain its brand name as part of RRD, which said Williams Lea clients will benefit from RRD’s “client-centric approach, global reach and focus on leading technology”. Tom Quinlan, president and CEO of RRD, said: “This acquisition closely aligns with RRD’s growth strategy as we look to build upon our business support offerings and achieve the vision of our Digital, Creative and Business Support Services segment.”
Nord Anglia Education acquired in $14.5bn deal
Nord Anglia Education, a global operator of over 80 private international and boarding schools in 33 countries, has been acquired by a consortium of institutional investors.
EQT, one of the investors, announced the successful completion of the deal on March 20, valuing the company at US$14.5 billion.
This follows the initial acquisition announcement made in October 2024, which noted that global institutional investors would diversify Nord Anglia’s shareholder base and support its long-term growth and stability.
Across its schools, Nord Anglia educates more than 90,000 students from ages two to 18, and prides itself on its personalized learning approach.
Other investors include Neuberger Berman Private Markets, Canada Pension Plan Investment Board (CPP Investments), Corporación Financiera Alba, S.A. (CF Alba) and Dubai Holding Investments (Dubai Holding).
Hg agrees sale of Dext to IRIS Software Group
Hg, the Manager of HgCapital Trust plc, announced that it has agreed to the sale of Dext Software Ltd, a bookkeeping automation platform provider, to IRIS Software Group, a global provider of accountancy, education management, HR, and payroll solutions.
This transaction values HGT’s investment in Dext at approximately £32.7 million. This would represent an uplift of £3.6 million (13% or 0.8 pence per share) over the carrying value of £29.1 million in the net asset value (“NAV”) of HGT at September 30, 2024.
On one side of the accounting value chain, IRIS Elements supports accountants and businesses with practice management and compliance functionality, such as accounts production and tax returns. On the other, Dext simplifies bookkeeping and improves productivity by automating routine tasks with AI. Together, both companies will cover the entire end-to-end accountancy workflow, from data entry and processing to compliance, reporting, and advisory services.
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. |