IC Memo Draft
AI-generated · Review and edit before submission · Meridian Capital Partners III
Confidential — Investment Committee
Investment Committee Memorandum
Meridian Capital Partners III — LP Secondary Interest Acquisition
Prepared by
Sarah Kim, VP
Diligence Team
Date
November 21, 2024
For IC Meeting Dec 2, 2024
Deal Reference
MCP3-2024-047
Bid Deadline: Dec 20, 2024
Executive Summary
We recommend proceeding to final bid on a $692M LP secondary interest in Meridian Capital Partners III (MCP III), a 2014-vintage buyout fund managed by Meridian GP Holdings LLC. The proposed purchase represents an 18.3% discount to Q3 2024 NAV of $847M, consistent with current secondary market pricing for similarly-vintage buyout funds.Q3 Report p.3
Diligence is substantially complete. One material compliance issue has been identified — a potential OFAC and EU sanctions match on Konstantin Petrov, UBO of ClearVision Media Ltd. (portfolio company). This issue requires resolution by legal counsel prior to final commitment.Screen Report
Transaction Overview
| Fund | Meridian Capital Partners III, L.P.LPA p.1 |
| Vintage | 2014 (Final close December 2014)LPA p.12 |
| Strategy | North American / European BuyoutLPA p.4 |
| Fund Size | $1,247M committed capitalQ3 Report p.3 |
| Seller | Institutional LP (identity under NDA) |
| Interest Size | LP interest representing approx. $847M NAVQ3 Report p.3 |
| TVPI | 1.8x (DPI: 0.9x, RVPI: 0.9x)Q3 Report p.5 |
| Unfunded Commitment | $124M remaining callable capitalQ3 Report p.4 |
| GP | Meridian GP Holdings LLC (J. Whitmore, R. Okonkwo, L. Bergmann)LPA p.3 |
| Fund Term | 10 years + 2 one-year extensions (expires Dec 2026 + extensions)LPA p.12 |
Key Transaction Terms
| Proposed Price | $692M (base case)Model p.1 |
| Discount to NAV | 18.3% to Q3 2024 NAV of $847MQ3 Report p.3 |
| Unfunded Obligation | $124M assumed by buyer (at par less $8M est. discount)LPA p.75 |
| GP Consent | Required; request submitted; 30-day ROFR window runningLPA p.74 |
| Expected Close | December 20, 2024 (subject to GP consent)Transfer Agmt. p.8 |
| Management Fee | 1.5% on committed capital; step-down to 1.25% post-IPLPA p.47 |
| Carried Interest | 20% above 8% preferred return; European waterfallLPA p.52 |
| Transfer Restrictions | Transferee must be Qualified Purchaser; $5M minimumLPA p.75 |
Investment Merits
- Attractive discount to high-quality NAV. The 18.3% discount is within secondary market norms for 2014-vintage buyout funds (peer range: 16.8%–21.0%). The fund's TVPI of 1.8x reflects strong underlying portfolio quality with meaningful DPI (0.9x already returned).Q3 Report p.5Comps Table
- Experienced GP with strong key-person continuity. All three designated key persons (Whitmore, Okonkwo, Bergmann) remain active with >50% time commitment confirmed. GP has been managing the fund since 2014 with consistent LPAC engagement.LPA p.83Key Person Bios
- Diversified portfolio with visible exit pipeline. Portfolio includes three primary holdings (HorizonTech, NorthStar Logistics, Apex Healthcare) with strong Q3 2024 financial packages. Hold periods suggest 2–3 exits are probable within 18 months, providing meaningful near-term DPI uplift.Portfolio Co. FinancialsGP Track Record p.12
Key Risks
- OFAC / EU sanctions exposure (Konstantin Petrov, UBO of ClearVision Media). A potential OFAC SDN and EU Consolidated List match has been identified on the ultimate beneficial owner of ClearVision Media Ltd., a portfolio company. This creates potential sanctions compliance risk. Legal counsel review is required before commitment.Screen ReportHIGH PRIORITY
- Unfunded commitment ($124M) represents meaningful capital obligation. The $124M remaining callable capital will require future funding. Buyer must model capital calls into liquidity planning. Unfunded estimated to be called within 12–24 months based on remaining portfolio company activity.Q3 Report p.4LPA p.75
- GP consent and ROFR process introduces timeline risk. Transfer requires GP discretionary consent and a 30-day ROFR window. GP may exercise ROFR or other LPs may have tag-along rights. Consent request submitted; outcome expected by Dec 5, 2024.LPA p.74Transfer Agmt. p.8
Recommendation
Proceed to final bid at $692M (18.3% discount to Q3 2024 NAV)Q3 Report p.3
Subject to: (1) satisfactory resolution of the Konstantin Petrov OFAC/EU sanctions match by legal counsel; (2) receipt of GP consent letter; and (3) finalization of transfer fee calculation and seller tax disclosures.
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