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PAI Moves to Delay Exit From $10 Billion Nestle Ice Cream JV

(Bloomberg) — European private equity firm PAI Partners is in talks with investors about a new fund to hold its 50% stake in its ice cream joint venture with Nestle SA, according to people familiar with the matter.

PAI is working with a bank to test investors’ appetite for a so-called continuation fund that would help it extend the lifespan of its investment in the Froneri ice cream business, the people said, asking not to be identified as the information is confidential. A deal could value Froneri at about $10 billion, one of the people said.

Discussions are under way with potential investors, including sovereign wealth funds, that might back the new fund, the people said. 

Buyout firms increasingly have turned to continuation vehicles to deal with a backlog of unsold investments as dealmaking has slowed over the past couple of years. Sponsors use them to move assets from older funds into a new vehicle, enabling buyout firms to hold on to their portfolio companies for longer than the typical investment cycle.

The talks could also lead to a minority stake sale in Froneri to long-term investors, the people said, cautioning that no deal is certain. Representatives of PAI and Nestle declined to comment.

The Froneri business, which includes popular brands like Haagen-Dazs, already sits in PAI’s Continuation Fund V, which was launched in 2019. That fund also houses Italian eyewear maker Marcolin. 

The buyout firm this year started exploring strategic options for Froneri, including a possible stock market listing. 

PAI bought UK-based R&R Ice Cream in 2013 from Oaktree Capital Management and other investors. In 2016 it combined that business with part of Nestle’s ice cream empire to create Froneri.

Froneri competes with the ice cream business run by Unilever Plc. The Anglo-Dutch conglomerate said in March it will spin off or sell its ice cream unit, home to popular brands such as Magnum and Ben & Jerry’s.

–With assistance from Dasha Afanasieva.

©2024 Bloomberg L.P.

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