Record Year For Secondaries As Partners Fund Closes

Investors in the new fund include the Pennsylvania Public School Employees’ Retirement System, which pledged $100 million in early 2012.

The fund closed on the heels of three other noteworthy secondary offerings, each of which closed in the last 18 months and occupy the top three spots among the largest secondary funds ever raised. Those other funds are AXA Secondary Fund V LP, which raised $7.1 billion, Lexington Capital Partners VII LP, which raised $7 billion, and Coller International Partners VI LP, which raised $5.5 billion.

The Zug, Switzerland-based Partners Group said its fund was oversubscribed and that it has already committed more than 20 percent of the fund’s assets to a cross-section of assets. In a statement, the firm said institutional investors were increasingly interested in selling private equity assets because of regulatory changes and because “a growing number of institutional investors are seeking to rebalance their private equity exposure” in the wake of the record fundraising that took place between 2005 to 2008.

The firm also plans to allocate more resources to Asia than it did in previous funds. “In the past few years we have passed on several opportunities to invest in Asia as we felt the price from sellers was too high,” said Stephan Schäli, the firm’s head of secondaries, in an e-mail message. “In the last 12 months, we feel the bid-ask spread has closed and there are better opportunities to find a win-win solution between buyer and seller,” he said.  

Why the interest in Asian private equity? “As many funds are entering their ‘harvesting’ phase, many existing investors will seek liquidity through the secondary market to capture gains,” said Schali. In addition, he said, “some investors from the U.S. and Europe are disappointed in the performance of their Asia portfolios.”

Partners Group manages $35 billion across a variety of strategies, including private equity, private real estate, infrastructure and private debt.