Firm: Pomona Capital
Fund: Pomona Investment Fund
Target: $500 mln
Pomona Investment Fund, earmarked for mature stakes in limited partnerships, is open to investors with a $25,000 minimum commitment. Money manager Voya Investments, which will help sell the fund, has invested $50 million in the pool. Pomona is a unit of Voya, formerly ING.
Michael Granoff, CEO of Pomona Capital, said the fund should resonate in particular with wealthy investors who have little or no access to private equity in their 401(k) or related retirement plans. Over time he said demand for this kind of fund should grow as defined benefit plans—the traditional way that individuals gain access to private equity—become less common.
The newly-formed, non-diversified, closed-end management investment company will have annual net expenses of 4.09 percent, according to a filing.
In the ninth quarter of the fund’s life, up to five percent of the fund can be redeemed on a quarterly basis, to help provide liquidity for investors. The fact that it is a secondary fund with stakes in pools often in their cash-generation stages may help smooth out the J-curve for returns, Granoff said.
With its low minimum commitment of $25,000, Pomona Investment Fund is similar to the $550 million CPG Carlyle Private Equity fund, managed by Central Park Group, which invests in secondary stakes in Carlyle Group funds. Similarly, Altegris is providing exposure to Kohlberg Kravis Roberts & Co private equity funds through Altegris KKR Commitments Fund, which will be marketed through Merrill Lynch.
Unlike those, Pomona is not going to focus on buying secondary stakes in its own funds. Nor is Pomona using another manager to run the fund, Granoff said.
“Carlyle is following Carlyle’s strategy and KKR is following the KKR strategy,” Granoff said. “We’re following our strategy. We want an emphasis on the secondary side, which we know how to do (and) provide a broad portfolio of fund interests.”
While secondary fund pricing remains high, Pomona knows how to find good deals, Granoff said. “We’re trying to buy into high-quality assets,” he said. “In this market, we’ve tended to focus on interests in funds that are pretty mature.”
Accredited investors include individuals who have earned $200,000 in each of the two most recent years or married couples who have earned $300,000 of income in each of the two most recent years, according to regulatory guidelines.
Pomona Capital closed its most recent secondary fund in 2014, Pomona Capital VIII, with $1.75 billion in commitments.