Azla Advisors Closes One of 2009’s Largest Secondary Transactions

Azla Advisors, a leading boutique secondary sell-side Advisor, closes €150m divestment of Merrill Lynch stake in Kreos Capital III to five top-tier Limited Partners in challenging environment

New York, May 7, 2009: Azla Advisors, a leading boutique secondary sell-side advisory firm is pleased to announce the closing of one of 2009’s largest secondary transactions. Azla has advised Merrill Lynch on the divestment and syndication of €150m of original commitment in Kreos Capital III, the 2006 vintage fund of Kreos Capital, Europe’s leading Venture Debt Fund Manager, to five top tier investors led by Paul Capital and including AIG PineStar Capital (the secondaries private equity team of AIG Investments), HarbourVest Partners, Access Capital Partners and SVB Financial Group, the parent company of Silicon Valley Bank. 

Using its proprietary valuation methodology, which is unique to the secondary advisory space, Azla’s team of former senior operating buyout and VC-sponsored management and GP’s conducted a bottom-up due diligence of the 75 companies in the Kreos III portfolio. This process enabled Azla to discover and demonstrate hidden portfolio value, which in tandem with the crafting of an innovative transaction structure, enabled Azla to both optimize pricing and meet the buy side participant’s return requirements, while going through a rapidly changing market environment.  

Roman Kogan, Director at Merrill Lynch, commented:“We are very pleased with the outcome of the secondary sale process run exclusively by Azla Advisors. Despite a challenging economic environment, Azla’s detailed approach and bottom-up valuation analysis allowed us to optimize transaction pricing.  Azla’s strong buy-side relationships, fundamental understanding of venture debt, and ability to educate the market on this unique asset class were central to an effective execution strategy. We also appreciated the commitment of Azla’s management to this transaction and their very responsive client service, both of which had a strong impact on the closing of the transaction.  While many secondary transactions have not been able to close in this market, Merrill and Azla partnered to achieve a successful closing that included five first-rate investors.”  
Guy Rico, Partner at Paul Capital, commented: “We very much enjoyed working with Azla Advisors. Azla’s ability to communicate the specificities of the venture debt asset class to potential syndicate members and manage a complex transaction helped make this transaction a success.  Its quick and thorough response to every due diligence request allowed us to overcome diligence challenges in the current environment.  We look forward to working with Azla again for future opportunities that meet Paul Capital’s strategy.”

Ross Ahlgren, General Partner at Kreos, commented: “Azla worked very closely with Kreos throughout the secondary process and we found that their valuation methodology and models gave full weight to the significant value in all elements of our portfolio. We found that Azla’s hands-on approach and their team’s experience as Company Management and GPs enabled them to get up to speed on our asset class very quickly.”

Simon Hirtzel, Chief Operating Officer of Kreos, continued: “Azla made sure to include Kreos’s objective of building a long-term diversified LP base into the secondary process and delivered for both Merrill Lynch and Kreos.  We look forward to the possibility of working with Azla again in the future and would highly recommend them to GPs raising capital around a unique portfolio of assets as well as to their core market of LPs divesting on the secondary market.”

About Azla Advisors -

Azla Advisors was formed in 2006 by a team with many years of experience as GPs, Top-tier Buyout and VC-backed executives and Private Equity Advisors. Azla’s operating and investing experience, unique valuation methodology which optimizes pricing, and policy of taking on limited concurrent engagements, enables Azla to provide a differentiated, client-centered, value-added suite of secondary advisory services to LPs and GPs. Azla’s unique secondary advisory approach yields superior performance and client results:
Over the past three years, Azla has fully completed 100% of its client advisory assignments at an average price 32% higher than the secondary advisory industry benchmark.  These results are driven by Azla’s:

  1. Proprietary Valuation Methodology – Azla “opens up the hood” of the underlying assets to discover and demonstrate hidden value that optimizes pricing
  2. Focus and Dedication – Azla takes on a limited number of assignment concurrently, assuring our clients constant senior management hands-on strategy and execution, and continues working on a transaction until it is completed to client’s satisfaction
  3. Innovation and Creativity – Azla crafts innovative and creative transaction structures to bridge gaps between potential buyers and sellers
  4. Selectivity - Azla is extremely selective in the assignments it takes on
  5. Market Relationships - Azla has deep and trust-driven relationships with the secondary buying community.

For more information on Azla Advisors, or a copy of a white paper on our unique approach to secondary advisory services please contact David Waxman at +1-646-291-6310 or