Australia’s Ironbridge alters LP secondary exit proposal
Ironbridge Capital’s LPs will not be obliged to commit capital to a new fund as a condition of participation in a vehicle set up by the Australian GP to absorb assets held by its first two funds. AVCJ understands that the proposal has been amended so existing investors have the option of rolling over their equity or exiting, with the new fund raised independently of this activity.
Ironbridge originally asked investors - both existing LPs that wanted to stay involved and new LPs replacing those deciding to exit - to contribute to a A$250 million ($233 million) vehicle that will make fresh investments.
Although some members of the LP advisory board wanted the deal to go through, questions were asked about the structure, and these came to a head in the past fortnight, according to sources familiar with the situation. Legal issues - specifically regarding LP advisory board members' fiduciary duties - featured prominently among the concerns.
This development should not derail Ironbridge's broader plans. The secondary transaction provides liquidity to investors while also allowing more time for assets to developed and exited, contributing to the GP's overall track record. Some LPs that opt to forgo immediate liquidity in expectation of future realizations from Funds I and II - a sign of confidence in the GP - might contribute to a smaller new fund anyway.
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.
Three or four exits are expected this year, an LP previously told AVCJ.
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