French investment group Wendel SE said it’s in exclusive talks to acquire a controlling stake in mid-market private equity firm IK Partners.
(Bloomberg) — French investment group Wendel SE said it’s in exclusive talks to acquire a controlling stake in mid-market private equity firm IK Partners.
Family-backed Wendel will make IK Partners the foundation of a new asset management business overseeing third-party money, it said in a statement Tuesday, confirming an earlier Bloomberg News report.
IK Partners, led by Chief Executive Officer Chris Masek, manages about €11.8 billion ($12.4 billion) of private assets and has invested in more than 180 companies since it was founded in 1989, according to the statement. It focuses on deals in the Benelux market, DACH region, France, Nordics and the UK.
Wendel is in talks to invest €383 million for a 51% stake in IK Partners and rights to 20% of the carried interest on its future funds, according to the statement. It plans to commit significant capital to support IK Partners’s funds as well as develop new strategies.
The parties aim to complete a deal in the first half of 2024, with the remaining stake in IK Partners to be bought in subsequent transactions between 2029 and 2032. IK Partners’ day-to-day management will operate autonomously and its investment committee will remain fully independent, Wendel said in the statement.
New Strategy
Smaller private equity firms have been getting snapped up by larger players as the industry grapples with the impact of rising interest rates.
Last month, Bridgepoint Group Plc agreed to acquire infrastructure investor Energy Capital Partners, while CVC Capital Partners struck a deal for DIF Capital Partners. Arjun Infrastructure Partners has also been exploring strategic options, people with knowledge of the matter have said.
Laurent Mignon, Wendel’s group CEO, told reporters on Tuesday that the private equity industry is in the midst of a “consolidation movement” that will continue to develop. “The market is positive to do external growth,” Mignon said.
The deal for IK Partners dovetails with the fresh strategic direction announced by Wendel in March. The company, which previously invested from its own balance sheet, laid out an ambition to develop a new asset management business overseeing third-party money.
Wendel also said it would adopt an active portfolio management strategy with the aim of investing €2 billion of equity within two years. The firm is led by Mignon, who joined last year after working in top positions at French lender Natixis SA and its parent company Groupe BPCE.
Expansion Drive
Shares of Wendel have fallen 15% in Paris trading this year, giving the company a market value of about €3.3 billion.
Other European investment firms have also been seeking to diversify their product offerings and tap new sources of capital.
CVC is considering an Amsterdam initial public offering as soon as the coming months, people with knowledge of the matter have said. Rival EQT AB has been expanding through acquisitions, buying Baring Private Equity Asia to boost its presence in the fast-growing region last year.
–With assistance from Alexandre Rajbhandari and Angelina Rascouet.
(Adds Wendel CEO quote in eighth paragraph.)
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