AGCA, secondary investors buy CS legacy assets

Although not a conventional spin-out - or only second half of one, at least - the transaction will fuel secondary investors' interest in helping management teams start afresh with new LPs in the event that existing backers are unable or unwilling to continue.

"The assets under management are seasoned and stable, and that gives us a lot of comfort," Soma Ghosal Dhar, CEO of AGCA. "We have access to fund-of-funds that have a longer term view of Asia and have raised a lot of capital. If a portfolio company needs additional capital, we can now do follow-on investments. You can't do that if your fund is in wind-down mode."

GhosalDhar set up AGCA with Harjit Bhatia (pictured), the pair having previously worked together at Credit Suisse. Bhatia was appointed head of PineBridge Investments' Asia PE operations last year but retains a financial interest in AGCA and fulfils a mentor-type role at the firm.

There has been no change in the actual management of the portfolio. At the time of the original spin-out, AGCA was tasked with managing the assets on behalf of the LPs - Credit Suisse and its affiliates, plus a few third-party investors such as trusts and high net worth individuals. Now all apart from one of the original LPs have exited, replaced by HarbourVest and Axiom; a new GP has been created and AGCA is contracted as its advisor.

The assets are growth capital investments spread across the region - India, Southeast Asia and China - in sectors including infrastructure, consumer, alternative energy and financial services. Most were made between 2008 and 2009.

For such transactions to come to fruition the seller has to be willing. This is a key consideration in Asia where, unlike the US, secondary portfolios that come on the market tend to be young and non-distressed, which means no fire sale prices. An additional challenge presented by the Credit Suisse portfolio was its geographical diversity, which complicated legal negotiations.

There has been one other comparable transaction in the region: the spin-out of Bank of America Merrill Lynch's Asian PE team to form NewQuest Capital Partners, with Paul Capital and LGT Capital Partners joining HarbourVest and Axiom as LPs. NewQuest is managing the legacy portfolio but also scouting for secondary direct opportunities. Tim Flower, a principal at HarbourVest, sees AGCA fulfilling a similar role, noting the potential for acquisitions of existing PE portfolios in India and South East Asia.

"There are some opportunities where some other existing LPs or GPs need to sell and we could provide a solution," adds GhosalDhar, "but this doesn't mean we can't do other things as well."

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• Topics
• Secondaries
• Secondaries
• Buyouts
• Southeast Asia
• South Asia
• India
• Southeast Asia
• Secondaries
• Credit Suisse Private Equity Asia
• Harjit Bhatia
• HarbourVest Partners
• Axiom Asia Private Capital