Carlyle’s AlpInvest Secures $1.3bn Continuation Fund for Kinderhook

Kinderhook Industries, LLC (“Kinderhook”), a leading middle market private equity firm, announced the closing of a Continuation Fund capitalized by AlpInvest Partners (“AlpInvest”), a subsidiary of global investment firm Carlyle (NASDAQ: CG), and a leading group of limited partners.

The Continuation Fund was established to acquire the nine portfolio companies in Kinderhook’s fourth and fifth funds.  The $1.3bn Continuation Fund includes $300 million of unfunded capital to drive organic growth initiatives and strategic acquisitions at these companies.

Founded in 2003, Kinderhook Industries specializes in middle-market control investments in the healthcare services, environmental / business services and automotive / light manufacturing sectors.  The firm has raised over $5 billion across seven private equity funds and has completed over 400 platform and add-on investments since inception.

The Continuation Fund transaction was led by AlpInvest and supported by a diverse group of high-quality investors, including both Kinderhook Capital Fund IV and Fund V limited and general partners.

All limited partners of both funds were provided with the option to roll all their interests into the Continuation Fund, sell all their interests, or sell a portion of their interests and roll a portion into the Continuation Fund.

Chris Michalik, Managing Director at Kinderhook, said, “We are proud to partner with AlpInvest and the other continuation fund investors on this oversubscribed transaction.  The AlpInvest team worked efficiently to understand our portfolio companies and their growth opportunities.  They leaned in and contributed to the success of the transaction.”

“We believe this deal is a win-win, generating significant liquidity and attractive returns for selling limited partners.  At the same time, the new fund provides our portfolio companies, and their management teams, with additional committed capital to execute organic growth initiatives and to pursue strategic acquisitions,” Chris added.

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“This is a very exciting transaction for Kinderhook and our investors.  It caps off what we view as an exceptional year for our firm.  In 2023, we closed six portfolio company realizations, returning about $1.0 billion of capital to our investors.  Combined with this CV transaction, Kinderhook has returned over $1.8 billion of capital to our investors this year,” said Rob Michalik, Managing Director at Kinderhook.

“We believe this transaction provides a great outcome for our Fund IV and Fund V limited partners, who are receiving a compelling value for these companies,” said Tom Tuttle, Managing Director at Kinderhook.

Michael Hacker, Co-Head of Secondaries and Portfolio Finance at AlpInvest, emphasized, “This continuation fund transaction marks a significant milestone in our longstanding and collaborative partnership with Kinderhook. We are thrilled to partner with Kinderhook, leveraging their remarkable two-decade track record of success as they continue to generate value from this portfolio of market-leading companies. This transaction underscores the importance AlpInvest places on nurturing long-term partnerships with top-tier private equity managers across our platform.”

“We are particularly encouraged that this transaction provides tangible value for all parties involved.  Not only does the continuation fund provide liquidity for Kinderhook’s original limited partners in a challenging macroeconomic environment, but it also provides meaningful new capital to support the continued value creation strategies that Kinderhook is pursuing within the individual portfolio companies,” said Matthew Romanczuk, Managing Director at AlpInvest.

Aviditi Advisors served as financial advisor and Kirkland & Ellis LLP served as legal counsel to Kinderhook.  Ropes & Gray LLP served as legal counsel to AlpInvest.

Source: Carlyle

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