PAI Partners, the European buyout firm, has taken its first step to diversify its business with the establishment of Akkadia, a fund manager that will invest in quoted equities.
Akkadia, which is being run by Deutsche Bank veteran Philippe Guez, will manage and advise funds dedicated to the acquisition of significant minority stakes in listed mid-cap companies that offer substantial value and will work with management teams on the implementation of value enhancing schemes.
Guez worked at Deutsche Bank for 12 years where he held a number of key positions, including head of global investment banking in France and head of equities in France and Italy. Before Deutsche Bank he was equity analyst and then head of equity sales at Warburg.
Dominique Mégret, chairman and chief executive of PAI said: “We have known Philippe for a long time. Philippe has an outstanding knowledge of the stock markets and is renowned for the acuteness of its market analysis. We are delighted to support this new venture; we like the concept and very much believe it is a good market timing to start this activity.”
Mégret told PEO the venture was 50:50 owned with Guez. “It will (raise) hundreds of millions rather than billions and be more modest in size than PAI’s latest buyout fund, which closed on €5.4 billion,” he said, adding they would look to raise the capital from PAI’s existing investor base and the fund would generate a management fee and carry in line with PAI’s current fund.
At the outset it will target French companies, though the goal is to invest across Europe ultimately. “The investment period will be shorter and the transactions less leveraged. You will be leveraging assets rather than cash flow,” added Mégret.
PAI follows FTSE 100 firm 3i which also has a quoted equity business. Last week, US buyout group Kohlberg Kravis Roberts joined the quoted equity fray with its hire of TCW Group president William Sonneborn to launch a listed equity asset management business. To begin with Sonneborn will work with the firm’s credit investment unit.
An increase in the number of PIPEs, private investments in public equities, is also widely anticipated. TPG Capital came close to participating in troubled UK bank Bradford & Bingley’s rights issue.
3i Quoted Private Equity made its fourth investment last week. It said it was acquiring up to 21million shares in Salamander Energy, an oil and gas exploration company, at 300 pence per share. It would mean a potential investment of up to £65.5 million and a potential shareholding in Salamander of up to 14 per cent.
The investment will provide an exit for 3i’s growth capital team, which backed Salamander in 2005.