Kline Hill hits first close on $64.4 mln for debut small secondaries fund

  • Firm: Kline Hill Partners
  • Amount Raised: $64.4 mln
  • Target: $120 mln
  • Hard Cap: $180 mln

A new manager raising a fund to pluck the low-hanging fruit of small secondary stakes overlooked by bigger players held a first close last month on $64.4 million, according to a person with knowledge of the fundraising.

Kline Hill Partners, formed by former Willowridge Partners executive Mike Bego, launched the firm last year. He was joined by Jared Barlow, a former Partners Group secondaries executive.

The firm is targeting $120 million for its debut fund, with a $180 million hard cap. The fund will invest in secondary stakes valued in the single million-dollar range.

Limited partners in the fund so far include a mix of endowments, foundations and family offices, the person said.

The firm so far has completed one deal with an active pipeline, the person said, without providing details.

Kline Hill also has hired a manager of finance and operations, Danielle Buccola, who joined from RSM US LLP, according to her LinkedIn profile, and Tom Melly, who previously worked as an investment banking associate at CRT Capital Group. Melly’s title is as yet unclear.

Many firms bypass the small side of secondaries because “it’s an area where there’s an awful lot of work to put out a small amount of money,” Bego told Buyouts in a prior interview. “That deters a lot of people. It’s fairly labor intensive.”

Barlow previously told Buyouts that while prices have been high in the broader secondary market, they seem more reasonable in the lower end of the market. “The smaller end of the market is somewhat insulated from the pay-up pricing of the mid-cap and larger-cap transactions that are going to have more capital chasing them,” Barlow said. “It’s kind of a small-is-beautiful story.”

Secondaries Investor reported on the first close earlier.

Action Item: Check out Setter’s Capital’s secondary volume report here: http://bit.ly/1HrVFZO

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