Coller Capital Finds $250M For Secondaries –

The interest L.P.s have shown in international buyout funds has begun to extend to secondary partnerships.

Coller Capital, a London-based firm that invests exclusively in secondaries-has grown rapidly in the last four years and now is close to wrapping its third fund, thereby becoming one of the largest players in that increasingly crowded market niche.

The firm last month held a $250 million first closing on its latest secondary fund and has raised 65% of the capital from U.S. investors. The group launched Coller International Partners III in September setting a $350 million target (BUYOUTS Aug. 3, 1998, p. 1). Coller now anticipates wrapping the fund at more than $400 million in the third quarter.

Other firms that invest in secondary positions also are going global.

Pomona Capital, one of the more established U.S. secondary investors, early this year opened a London office and hired Brian Wright, formerly with Hambros Bank and Schroder Ventures, to head the effort.

Also, Pomona hired Marshall Parke, formerly with Lexington Partners, to pursue transactions in Asia.

Landmark Partners, perhaps the largest secondaries investor, opened a London office two years ago and will market itself as an international investor when it launches its ninth fund in several weeks.

Coller’s current fund raising comes less than a year after the group wrapped its $240 million second fund, raising most of the capital from U.S. limiteds, which in itself was a huge jump from the firm’s $66 million debut fund that it raised in 1995.

The group committed most of the capital from Fund II to buy Shell Oil Co.’s private equity portfolio.

Secondaries Follow Buyouts to Europe

Jeremy Coller, the firm’s chief executive, said he believes his group is attracting interest because, in spite of other group’s efforts, it is the firm that can still best acquire positions from European-based limited partners, which usually includes some commitments to Euro funds.

“L.P.s are interested in Europe and have mandates that tell them that they need to invest internationally,” said Mr. Coller, adding that this makes his firm a logical place to employ capital.

In actuality, although Coller Capital invests globally in secondary positions, it traditionally has committed about two-thirds of its capital to positions in U.S. funds. However, it still has more of an international flavor than most U.S.-based groups that invest in secondaries.

Mr. Coller describes the movement of other secondary investors to Europe as a natural consequence when secondary funds, like buyout funds, have been raising increasing amounts of capital.

California Public Employees’ Retirement System is the lead investor in Coller III, committing $100 million. General Motors Investment Management has committed $30 million and Houston Firefighters’ Relief & Retirement System and Hughes Investment Management also have committed capital to the international secondaries fund.