Great Hill closes Fund VIII in quick time on $4.65bn, Exploring the transparency question in PE

Happy Wednesday!

This is Chris, on the Wire for MK.

What do you have going this morning? I have a reminder for yinz: deadline for our Deal of the Year is coming up quick – Friday, Feb. 11. So get your candidates in now. Send them to me at cwitkowsky@buyoutsinsider.com. Visit here for more info about the awards.

Debate: Last fall, I tuned into a great discussion between a U.S. Senator from Louisiana and the state Treasurer from Illinois about private equity investing. The back and forth helped illustrate the special lengths private equity LPs go to justify the LP/GP relationship, which includes some level of ambiguity on the exact costs of the strategy.

“Are you telling me that you make private equity investments as a fiduciary without understanding the fees and, if so, whose fault is that?” asked Louisiana Senator John Kennedy during a hearing of the Senate banking committee last year.

He compared the situation to buying a car: “If I go to buy a car, and the car salesman doesn’t explain the details of the financing to me, I just walk away. I don’t call for the federal government to take over every car salesman in America. What am I missing here?”

The treasurer, Michael Frerichs, said Illinois’s state pension system, one of the largest investors in private equity funds, is forced to spend money analyzing and monitoring its private equity portfolio simply to make sure that it is paying proper fees and expenses.

So why back managers with opaque fees and expenses? It’s a reasonable question, and one that gets to the heart of the idiosyncrasies of private equity investing, especially considering the transparency that exists in the public markets. Read my cover story here on Buyouts.

Big ‘un: Great Hill Partners just ripped through its latest fundraising process, part of a pattern of strong performing tech-focused funds raising at quick pace.

Great Hill closed its eighth flagship fund on $4.65 billion, beating its initial $3.5 billion target. The firm targets investments of up to $500 million in growing companies across software, digital commerce, fintech, healthcare and digital infrastructure. Read more here on PE Hub.

Bunch o’ deals: There’s been a slew of secondaries activity this month. Most recently, I covered a big sale from Shell’s corporate pension, which is selling an around $1.3 billion portfolio of stakes in mostly older PE funds. This comes as Dutch pension administrator APG is shopping a portfolio of around 1.5 billion euros of PE fund stakes.

Meanwhile, Siguler Guff closed a clean-up process involving its 2008 vintage Fund III, offering LPs several options for liquidity out of the older pool. Fund III was about half made up of interests in publicly traded Royal Pharma, and half in illiquid holdings in shipping assets, real estate, stakes in commingled funds and coinvestments.

Existing LPs were offered the chance to take shares in-kind in Royal Pharma, or the firm would sell the shares for the investors, or they could choose to do nothing and Siguler Guff would continue to manage the investment. For the illiquid holdings, existing investors could either sell or not. The fund itself was extended for another three years.

Interestingly, the secondary adviser on the deal was Brant Street Capital, which helped Siguler Guff work through a secondary sale a few years ago. Check it out there on Buyouts.

That’s it for me! Have a great rest of your day. Reach me with tips n’ gossip, feedback or book recommendations at cwitkowsky@buyoutsinisder.com or find me on LinkedIn.