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Kirkland Advises Nordic Capital on Closing of €6.1 Billion Fund X

Nordic Capital today announced the successful final close of Nordic Capital Fund X (“Fund X” or “the Fund”), at EUR 6.1 billion (including GP commitment of 6.5%). The Fund, launched in April 2020, was oversubscribed at its hard cap, and was raised in less than 6 months in a ground-breaking remote capital raise without holding any face-to-face meetings. This is the largest fund that Nordic Capital has raised since its inception in 1989 and surpasses its 2018-vintage Nordic Capital Fund IX which raised EUR 4.3 billion (including GP commitment).

Investors were attracted to Nordic Capital’s leadership, proprietary sourcing methods and proven track record of creating value through business transformation and solid earnings growth in its focus sectors of Healthcare, Technology & Payments, Financial Services and its selective investments in Industrial & Business Services. Nordic Capital’s strategy of focusing on non-cyclical, growth businesses was validated by the strong performance of the existing portfolio since the COVID-19 pandemic started. In addition, Nordic Capital recently received the highest ESG rating from the UNPRI.

Kristoffer Melinder, Managing Partner, Nordic Capital Advisors, said: “The rapid and successful close of our tenth fund is a significant milestone for Nordic Capital. To close at the hard cap in less than six months during the COVID-19 pandemic is a fantastic achievement that highlights the strength of our LP relationships and the considerable confidence that our blue-chip investors have in Nordic Capital. It is also testament to the strength of our team, proven investment strategy, the portfolio performance and Nordic Capital’s track record. We are grateful for the continued support of existing limited partners and delighted to welcome new investors to the Fund.”

Kristoffer Melinder added: “Nordic Capital’s investment strategy is based on finding growth businesses in our focus sectors where we can use our significant operational expertise and financial firepower to create value and, ultimately, excellent returns for our investors. The economic impact of the COVID-19 pandemic will continue to be felt for some time and the most successful fund managers will be those who respond well to emerging trends and market dynamics to leverage new opportunities. Fund X has a strong pipeline of attractive investment opportunities in our chosen sectors across Europe, and globally for Healthcare. The Fund has already signed its first investment in Siteimprove – a leading software company that supports digital accessibility for people with disabilities.”

Fund X attracted investors from across the globe, with investors from every continent including 38% from North America, 27% Europe, 17% from Asia, 15% from the Middle East and 3% from RoW. The investor base comprises a well-diversified mix of institutional investors: public and private pension funds (c. 49%); sovereign wealth funds (c. 16%); fund of funds (c. 13%); financial institutions (11%); and endowments and family offices (c. 10%). The new Fund expands Nordic Capital’s blue-chip investor base with 34% of commitments deriving from new investors. The re-up rate by capital of Fund IX LPs in Fund X is c. 90%. The Fund also drew significant support from Nordic Capital’s own team, as well as portfolio company management teams and industrial advisors.

Pär Norberg, Head of Investor Relations, Nordic Capital Advisors, said: “We are very grateful for the tremendous investor support. We launched this fund in the middle of a global pandemic, which required investors to completely alter their investment processes to enable remote diligence. The success of the fund raise despite these challenges reflects the investors’ considerable confidence in Nordic Capital’s strategy and team.”

Fund X will be invested across Europe, with a mandate for global investment in Healthcare as in the prior Fund and an emerging smaller global mandate also for Technology & Payments businesses.

Nordic Capital’s proprietary sourcing methods have continued to generate a strong deal pipeline despite the pandemic. It has in 2020, announced two new platform acquisitions: Max Matthiessen in May, a leading financial advisor in the Nordic region and Siteimprove in September, a global leader within website experience and digital marketing optimisation. Furthermore, it has supported several transformative portfolio company add-ons and completed two partial exits. Nordic Capital’s current portfolio companies have on average achieved 10% organic employment growth and an 8% increase in annual sales.

The fundraising was led by Nordic Capital’s in-house Investor Relations team, supported by Rede Partners who acted as global placement agent, Transpacific in Asia, Ameris in South America, with Kirkland & Ellis as lead legal counsel, supported by Carey Olsen in Jersey and Arendt in Luxembourg.

Kirkland advises Gordon Brothers on €100M ABL facility

Kirkland & Ellis has advised Gordon Brothers on an Asset Based Lending (ABL) facility in the amount of €100 million to a leading German hypermarket store chain. B. Riley Financial is participating in the loan as a minority partner.

The advice provided by a team of Kirkland lawyers from Munich and London included the comprehensive structuring of the transaction from a financial, contract and insolvency law perspective as well as its documentation and implementation.

Gordon Brothers is a global consultancy and investment company which provides customised liquidity solutions in the retail, commercial and industrial, and finance sectors.

The Kirkland team was led by Munich-based restructuring partner Sacha Lürken, debt finance partner Dr Alexander M.H. Längsfeld and restructuring partner Dr Bernd Meyer-Löwy; and also included London-based debt finance partners Evgeny Zborovsky and Karen Ford and associates Oliver Trotman and Adebayo Lanlokun.

Kirkland advises Civil Aviation Authority on first UK restructuring plan

Kirkland & Ellis is advising the UK Civil Aviation Authority on the restructuring of Virgin Atlantic Airways, in the first restructuring plan to be launched under the new Part 26A of the Companies Act 2006.

Virgin Atlantic’s plan represents a major first test of the new restructuring plan procedure, recently introduced under the Corporate Insolvency and Governance Act 2020 (effective from 26 June). The new plan offers the possibility of cross-class cram-down, to impose a restructuring on dissenting stakeholders, and the possibility of compromising operational as well as financial creditors. For analysis of the reforms, see our Alert deck.

Virgin Atlantic Airways Limited launched its restructuring plan on 14 July, with the backing of key financial stakeholders. The deal seeks to ensure the survival of the airline against the backdrop of the existential crisis in the travel industry, owing to COVID-19 and related restrictions.

The comprehensive, solvent recapitalisation deal involves a significant shareholder support package (including £200m in cash and the deferral of £400m of fees), £170m third party secured debt financing, and creditor support (including deferrals and advances from payments companies and aircraft lessors), together worth up to £1.2bn over 18 months.

The court convening hearing is scheduled for 28 July, with stakeholder meetings and the court sanction hearing scheduled to follow in the week commencing 17 August. Recognition of the plan will be sought under Chapter 15 of the U.S. Bankruptcy Code.

Crucially, the restructuring allows Virgin Atlantic’s planes to continue in operation. If successful, the deal will serve as important template for restructurings under the new procedure.

The Kirkland team was led by London restructuring partner Elaine Nolan with restructuring associate Kai Zeng.

Kirkland advises Travelodge and AllSaints on restructurings

Kirkland & Ellis is advising Travelodge, the UK’s largest independent hotel brand, on its company voluntary arrangement (CVA), which was approved by creditors on 19 June. The CVA involves Travelodge temporarily reducing rents and moving from quarterly to monthly payments on certain leases. Unlike most CVAs, there are no proposed hotel closures or permanent rent reductions.

The approval of Travelodge’s CVA follows the ground-breaking injunction to restrain a winding-up petition pending Travelodge’s restructuring and forthcoming legislation.

The successful vote will enable Travelodge to navigate the short-term challenges facing the business as a result of the COVID-19 pandemic. The process is now complete, subject to the usual challenge period.

Kirkland is also advising AllSaints, the global contemporary fashion brand, on the restructuring of its store portfolio through parallel CVAs of two English tenant companies. AllSaints successfully obtained recognition in the U.S. and Canada of one of the CVAs, which (if approved by creditors) will compromise the relevant company’s liabilities under leases in the U.S. and Canada. Recognition was obtained under Chapter 15 of the U.S. Bankruptcy Code and the Canadian equivalent (Part IV of the Companies’ Creditors Arrangement Act), on 17 June. If, and when, creditors approve the CVAs, follow-up recognition applications will be made to the U.S. and Canadian courts.

We believe AllSaints’ CVA represents a series of major firsts, including the first U.S. recognition of a landlord CVA, the first Canadian recognition of a CVA, and (if approved by creditors) the first compromise of U.S. and Canadian leases via a CVA.

The Kirkland team for Travelodge was led by restructuring partners Elaine Nolan and Kon Asimacopoulos and litigation partner Richard Boynton. Ian Wormleighton and Dan Butters, of Deloitte LLP, are the CVA supervisors. Tom Smith QC and Henry Phillips, barristers at 3-4 South Square, advised Travelodge on its CVA.

The Kirkland team for AllSaints was led by restructuring partners Elaine Nolan and Lisa Stevens in London, Joshua Sussberg and Neil Herman in New York, and David Seligman in Chicago. Richard Fleming and Mark Firmin, of Alvarez and Marsal, are the CVA nominees.

Kirkland Advises Sterling Group’s $2 Billion Oversubscribed Fund V

Kirkland & Ellis counselled The Sterling Group, an operationally focused middle market private equity firm, on the closing of Sterling Group Partners V, LP (together with its parallel fund, “Fund V”). Fund V was oversubscribed and closed at its $2 billion hard cap. The majority of Fund V’s capital was committed by returning investors. In addition, The Sterling Group, welcomed several new investors that expanded the firm’s investor base in the United States, the Middle East and Asia.

Read the company press release from Sterling Group

The Kirkland team was led by investment funds partners Matt Nadworny and Brian Delaney and associates Christine Wilson, Samara Sanderson, Nathan Wolcott, Nathan Judd and Josh Wilson; tax partner Stephen Butler and associate Victoria Chang; and employee benefits partner Liz Dyer.

Top Firms for Gender Equity & Family Friendliness Report

Yale Law Women (YLW) recognised Kirkland & Ellis LLP as a Top Firm for Parental & Caregiver Leave in its 2020 annual Top Firms for Gender Equity & Family Friendliness Report.

The annual list is a policy survey of Vault 100 law firms that examines inequities within the legal profession, highlights progress being made in the industry and identifies areas for improvement to serve as a tool for law firms, lawyers, and future lawyers with the aspiration of building more equitable workplaces.

Kirkland & Ellis LLP was previously honoured as a Top Family Friendly Firm in 2008, 2010, 2011, 2014 and 2015.

About Kirkland & Ellis

Kirkland & Ellis LLP is an American law firm. Founded in 1909 in Chicago, Illinois, Kirkland is the largest law firm in the United States by revenue (US$4.15 billion in 2019), and the seventh largest in terms of number of attorneys (2,307 in 2019).