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PAI Partners agrees to cut fund by half, continue investing

4 Dec 2009

French private equity firm PAI Partners has agreed with its investors that PAI Europe V will continue its operations, after months of indecision over whether the €5.4bn fund would cease operations.

After prolonged discussions with limited partners, the firm has decided to cut the fund size to €2.7bn, with 81 per cent of investors voting in favour of the move. The reduction will mean LPs do not have to invest as much as they had previously committed to before the downturn took effect. Despite cutting the fund in half, it has been decided that the vehicle will be immediately reopened.

The decision to shrink PAI Europe V was made “to better reflect the current investment environment”.

PAI’s new fund size is now the same as its predecessor, PAI Europe IV.

Chairman and CEO Lionel Zinsou and member of the executive committee Michel Paris said, “The partners of PAI are delighted to have found consensus with our investors and we thank them for renewing their trust in the team.”

This development is a sign that the power is shifting in favour of investors, even for funds that have already been raised.

A host of other private equity firms have made concessions for their investors. US distressed buy-out firm Sun Capital shrunk its latest fund from $6bn to $5bn, while TPG and Bain Capital, and European firm Permira have also made compromises for their limited partners by scaling back funds.

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