Palamon and Credit Suisse complete innovative liquidity transaction

Palamon Capital Partners (“Palamon” or the “Firm”), a pan-European growth investor, today announces the completion of an innovative funding transaction resulting in five top-tier investors purchasing stakes in prior Palamon funds from a number of existing limited partners and committing capital to a new vehicle investing alongside Palamon Auxiliary Partnership 2013, L.P. The investor group includes Adams Street Partners, Goldman Sachs AIMS Private Equity Group, Morgan Stanley Alternative Investment Partners, Dutch pension fund service provider PGGM and the Rothschild Merchant Banking Group.

In the first quarter of 2015, Palamon mandated Credit Suisse Asset Management Limited acting through Credit Suisse Private Funds Group (“Credit Suisse”) to organise a whole-fund liquidity option for limited partners interested in selling their interests in Palamon European Equity LP (“Palamon I”) and Palamon European Equity II LP (“Palamon II”). It was Palamon’s view that organising the sale of limited partnership interests through a GP-led and transparent process, concentrated solely on the Palamon funds themselves, would secure more accretive options at attractive pricing for those investors seeking liquidity as they re-balance their private equity portfolios.

Following a competitive auction process managed by Credit Suisse, an offer book was built for the entirety of the interests in both funds, which resulted in investors who elected to access liquidity being able to do so through an easy, efficient and smooth process at highly attractive pricing – reflecting the structure of the process and the quality of the assets in each of the portfolios. Over one quarter of the aggregate NAV was exchanged, with the structure and terms of Palamon I and II remaining unchanged following the sales.

The investor group has also committed capital to a new vehicle investing alongside Palamon Auxiliary Partnership 2013, L.P., which has made investments recently in the UK legal services provider, Simplify Group, and the Italian artisanal leather accessories brand, Il Bisonte. The two vehicles have already committed to the purchase of Currencies Direct in partnership with Corsair Capital.

Louis Elson, Managing Partner of Palamon Capital Partners said, “We could not be happier with the outcome of this process which has delivered an easy-to-access liquidity option for our existing Limited Partners at highly attractive pricing while serving to introduce a group of toptier investors to Palamon’s on-going investment programme. Recognition should be given to Credit Suisse, who ran a process that will no doubt serve as an industry benchmark for building further alignment and fluidity into the secondary market.

“We thank those LPs who are exiting our Funds for their support and valuable contributions over the years and extend a warm welcome to our new investors and look forward to working closely with them going forward.”

Jonathan Abecassis, from the Secondary Advisory team at Credit Suisse in London, said “Credit Suisse is delighted to have worked together with our long-standing client Palamon on a highly successful transaction. They deserve credit for their forward thinking approach to providing liquidity to their investors while securing capital from a blue-chip list of new investment partners. We believe this transaction is proof that the rapidly evolving secondary market can be utilised by successful GPs to offer transparent liquidity to their investors through an efficient, fair market process, while also attracting high quality, long-term investors to their platform”.

Since inception, Palamon has invested €1.1 billion directly and a further €800 million through co investments in 35 high-growth companies in ten countries. The Firm targets lower midmarket businesses with a focus on growth as the principal driver of value creation. Palamon’s portfolio of investments has consistently achieved a revenue growth rate of approximately 20% per annum, a key indicator of the Firm’s successful value creation approach. Its portfolio of currently includes Towry, a leading UK wealth manager; SARquavitae, the largest residential elderly care corporate in Spain; OSG, the leading national ophthalmic surgery provider in Germany; Il Bisonte, an Italian artisanal leather accessories brand sold around the world; and Feelunique, a fast growing on-line retailer of premium beauty products based in the UK.

Moody’s Analytics data set to help investors assess bonds on Crowdcube

●      Returns for bond investors top ￡300,000 in 2015

●      Around ￡10m invested in bonds over the last 12 months

●      New data powered by Moody’s Analytics

Crowdcube is now presenting investors with output from Moody’s Analytics’ private company risk model to help them assess the bond investment opportunities listed on the site. Square Pie and Vanarama are the first to display the new Probability of Default (POD) figure that represents a probability that the business issuing the mini-bond will default on any existing credit obligations.  

Mini-bond investors through Crowdcube have already received around ￡300,000 in returns so far in 2015 from interest payments, which are typically paid every six months. More than 2,000 people have invested around ￡10m in mini-bonds on Crowdcube over the last 12 months, including world-renowned tourist attraction Eden Project, award-winning River Cottage and pioneering private property developer Pocket Living, which is backed by the Greater London Authority.

Commenting on the development, Luke Lang, Co-founder at Crowdcube, said: “This represents a major leap forward in helping investors better understand the financial position of companies raising investment through a bond on Crowdcube. We work with established, sophisticated businesses with years of financial performance data under their belts and it is important that we reflect this and are transparent with our community of 200,000 savvy investors.”

Moody's Analytics helps capital markets and credit risk management professionals worldwide. Whilst POD is not a risk rating, it is an approximate measure of the credit-worthiness of the issuer before the mini-bond issue offered via Crowdcube. As such, it should be one of the factors considered by investors when assessing whether the interest rate on offer by the issuer is sufficient for the risk involved – the higher the risk, the higher the return investors should require.

Capita estimates that the value of the mini-bond industry will rise to ￡8 billion by 2017. Luke Lang added: “We’re inundated with established businesses, including high-street brands, who are looking at how a bond can secure growth finance for the business and help them engage more with their customers. Using Moody’s Analytics is part of an ongoing programme of improvements to provide investors with a better experience and reinforce our position as the number one choice for businesses looking to raise finance using a mini-bond.”  

Regus provides much-needed cheer for the market as profits more than double in H1

·         Shares in Regus rose strongly this morning as investors benefit from dividend rise

·          The group opened 231 new locations in first six months, all trading in line with expectations

As Regus reports its half year results, Ian Forrest, investment research analyst at The Share Centre, explains what they mean for investors.

“Interim results from office space provider Regus provided some much-needed cheer for the market this morning, with pre-tax profits more than doubling to £79.1m and revenues up 16% to £937m. The shares rose strongly in response to the news, with investors benefitting from a 12% rise in the interim dividend. Furthermore, the group opened a further 231 new locations in the first six months and investors will be pleased that the group said these were trading in line with expectations.

“Investors should acknowledge that the company continues to benefit from the structural shift towards more flexible and mobile work solutions. Additionally, the board remains confident for the company’s prospects for the remainder of 2015 and beyond.

“These are good figures from Regus as we believe they demonstrate respectable growth, despite some weakness in the global economic environment. As a result, we recommend the company as a ‘buy’ for investors seeking capital growth and willing to accept a higher level of risk.”