Coller Capital nears $5.5 bln for big secondaries fund

Coller Capital is approaching its $5.5 billion target for its seventh fund aimed at secondary investments in private equity, part of a crop of larger funds in the space, according to a source.

Coller International Equity Partners VII comes three years after Fund VI wrapped up at $5.5 billion, above its $5 billion target. The London-based firm boosted the base target by $500 million for Fund VII, with a targeted close for the fourth quarter.

The fund ranks third among secondary funds raised since 2013 behind about $10 billion each from Lexington Capital Partners VIII LP from Lexington Partners and Ardian’s AXA Secondary Fund VI LP.

The secondaries specialist has been drawing some high marks for performance. The Houston Firefighters’ Relief & Retirement Fund commitment to Fund VI generated an IRR of 24.94 percent as of Sept, 2014. That result outperformed all the LP’s crop of 12 secondary funds with vintages of 2002 to the present from rivals such as Landmark Partners, Lexington Partners and Permal Capital Partners.

Among the LPs for Fund VII, the State of Michigan Retirement System committed $150 million to the fund over the summer; New Mexico State Investment Council committed up to $75 million. Other LPs include Louisiana State Employees’ Retirement System, New Hampshire Retirement System and the Pennsylvania Public Schools Employees’ Retirement System.

Like past funds, Coller Capital will charge Class A investors a 1.5 percent management fee during the five year investment period and 10 percent carried interest. Class B investors pay a management fee of 0.85 percent during the investment period and 20 percent in carried interest.

“Class B shares are viewed as a reasonable option for clients preferring lower management fees, additional downside protection should the investments underperform, and/or greater alignment of economic interests provided by the higher carried interest rate option,” according to an investment memo from New Hampshire.

Among its deals this year, Coller Capital committed up to $500 million for a restructuring of Irving Place III to buy out existing LP commitments and for now investment in June.

In March, it purchased 34.3 million shares in Fair Oaks Income Fund Ltd previously held by GLI Finance Ltd, in March.

Last year, Coller Capital paid about $270 million to Monte de Paschi di Siena for an interest in MPVenture SGR.

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