Apax Partners merges US buy-out business with Saunders Karp and Megrue

Dr Martin Halusa, CEO of Apax Partners Worldwide, said, 'The Apax Partners and SKM teams have long known and respected each other, and we share common values.'

SKM's 15 buy-out professionals will join Apax Partners, and John F Megrue and Allan W Karp have become co-CEOs of Apax Partners. Megrue and Karp will also be members of Apax Partners' global executive committee.

Apax Partners operates across the United States, Europe and Israel. The firm pursues a balanced equity portfolio strategy, investing in late venture, growth capital and buy-outs. Apax Partners' funds invest in companies in the retail and consumer, IT, media, telecommunications, healthcare and financial/business services sectors. Following the merger Apax Partners will have about $20bn under management or advice.

SKM focuses on the retail, restaurants, consumer, healthcare, and the financial and business services sectors. Its investments have taken a variety of forms, including private company recapitalisations, traditional buy-outs and growth financings from $15m to $150m per investment.

Both the US-focused Apax Excelsior VI Fund, a $1.1bn fund launched in 2000, and SKM III, a $735m fund launched in 2000, are approximately 75 per cent invested.

Mergers between private equity groups are relatively rare and generally require an extremely compelling logic to overcome the intrinsic problems of marrying different personalities and strategies.

In this instance, it appears Apax will benefit from boosting the credibility of its US buy-out activity, traditionally overshadowed by its European arm. SKM, in return, will become part of a much larger private equity institution, with all the administrative and fundraising benefits that brings.

Apax is in the process of raising a new European buy-out fund. It held a close on around €3bn at the end of 2004 and is moving towards its target of €4.5bn.

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