Elliott backs Olympus Capital Asia continuation fund

The deal includes a $100 million tranche of senior debt held by the US Development Finance Corporation (DFC) – formerly known as the Overseas Private Investment Corporation (OPIC) – which expired earlier this year. In conjunction with the restructuring, DFC has agreed to extend the debt term to the end of 2021.

CPPIB will make a near-full exit, while more than 70% of the existing LPs are expected to exit in full, according to two sources close to the situation. LPs rolling over their positions will pay no management fees or carried interest, and leakage in the form of interest payments will be reduced because debt terms have been improved, one of the sources added.

The Olympus management team, which was the largest investor in the original fund with a double-digit percentage interest, is rolling over its entire GP commitment. Olympus declined to comment.

Fund III, a 2007 vintage vehicle of $750 million, received commitments from the likes of HarbourVest Partners, J.P. Morgan Asset Management, New York City Employees’ Retirement System (NYCERS), according to AVCJ Research. It is the largest fund Olympus has raised to date. DFC also participated, but at the time it typically structured investments in debt rather than equity.

In 2017, CPPIB completed a structured financing for Olympus through a profit participation loan. It replaced a separate layer of existing debt - this was debt Olympus had taken out against the portfolio to make distributions to LPs.

Around the time the deal closed, it was referred to as a preferred equity security and a primary capital commitment. This was one of the first known examples of a preferred equity structure being used in a secondary transaction in Asia. However, some industry participants questioned the designation, suggesting that mezzanine debt would be a more accurate description.

One of the key value drivers in the current Fund III portfolio is India hospital operator Aster DM Healthcare, the second source said. Olympus invested INR5 billion ($68 million) in the company in 2012 and put in another $65 million with True North Managers in 2014. Aster listed in 2018 and Olympus made a partial exit. It held a 23.03% stake – worth INR25.8 billion – as of June.

One portfolio company has been excluded: Korea-based OSB Savings Bank, which Olympus backed in 2013. The existing Fund III LPs will retain exposure to that asset.

The Olympus continuation fund represents Elliott’s first fund-level secondary investment in Asia. Best known as an activist investor, the firm is said to be increasingly interested in deals of this type.

Fairview Capital Group acted as financial advisor to the transaction.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Secondaries
• Growth
• GPs
• LPs
• Asia
• Olympus Capital Holdings Asia
• Secondaries
• activist investor
• Elliott Management