LONDON (Reuters) – Asset manager Neuberger Berman has started fundraising for new private equity funds after the completion last week of an employee-led buyout from the wreckage of former owner Lehman Brothers (LEHMQ.PK).
The New York-based money management firm said on Thursday it has started raising the 19th incarnation of the Crossroads fund of funds with a $1.25 billion target.
It has already received indications from investors prepared to put in some $500 million, said global co-head of alternatives advisory and placement Richard Anthony.
Private equity fundraising slowed dramatically in the wake of Lehman’s collapse as markets tumbled and many core investors, such as pension funds, found themselves over-allocated to the asset class. Others were just too nervous to invest new money.
“It’s probably the most challenging market for private equity fundraising we have ever seen,” said Anthony.
“We feel we are coming out of the worst of it — there has been a definite change in sentiment in the last month,” he added.
In a sign of the growing strength and demands of private equity investors, Neuberger will let them customise their investment by selecting how their investment is split across core strategies including distressed or lower mid-market buyouts.
Up to 40 percent of the fund will go into secondaries transactions — buying second-hand private equity assets, usually at a discount — across all the strategies.
The firm has also revived plans for $750 million to $1 billion global infrastructure fund after Lehman’s collapse killed the maiden fund halfway through the fundraising process.
Neuberger is signing an anchor investor in the U.S. which will put in $250 million, said Anthony.
Neuberger’s first new fundraising contract is for a first-time Texas-based buyout fund called Southlake, which is aiming to raise $250 to $375 million to spend on deals exclusively in that state.
Neuberger — which has a total of about $158 billion assets under management — is still raising funds for British PFI infrastructure investor Equitix, a contract it kept after Lehman’s demise.
By Simon Meads
(editing by Elaine Hardcastle)