Australia’s Ironbridge offers LPs secondary exit route
Ironbridge Capital has launched a hybrid structure for its latest fundraising, with investors in the Australian GP’s first two funds being given the opportunity to exit their positions or roll over into a new vehicle that will continue to manage the assets.
Those that choose to participate - new or old - will also do a stapled secondary transaction, contributing additional capital to a A$250 million ($233 million) fund that will make fresh investments.
The move is essentially an acknowledgment that it would be difficult for Ironbridge to raise a full-size primary vehicle due to underperformance of its first fund and the generally challenging fundraising environment. An interim vehicle gives the GP time and money to develop its track record.
"They were seeing a lot of secondary activity in their funds anyway, and instead of not getting anything from this activity, they have turned it into a GP restructuring and are looking to get more primary capital," an LP familiar with the situation told AVCJ.
The secondary vehicle will include approximately 10 assets estimated to be worth around A$600 million.
A couple of these come from Ironbridge's A$450 million debut vehicle, which reached a final close in 2004 and engaged in buyouts at the peak of Australia's boom market. Several portfolio companies struggled as a result of the financial crisis that followed. Yacht manufacturer Riviera entered receivership in 2009, while Barbeques Galore and Super A-Mart were merged and then partially exited at a loss to Quadrant Private Equity last year.
The rest of the assets are in the GP's second fund, a 2006 vintage vehicle with a corpus of A$1.05 billion, which is said to be in much better health than its predecessor.
If Ironbridge is able to fully exit Fund I and show further progress on Fund II - 7-8 investments have yet to be realized - then another, larger fundraise a couple of years down the line would likely be better received. Three of four exits are expected this year, the LP said.
Earlier this year, Advantage Partners adopted a similar approach, closing a JPY20 billion ($200 million) bridge fund intended to help the Japanese GP win back investor confidence following a trouble-hit fourth fund. It plans to return to market in 12-18 months time.
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