Aberdeen closes sixth Flag PE fund at $295 million

Aberdeen Asset Management has reached a final close of Flag Private Equity VI, (FPE VI), on $295 million, $70 million above its initial target.

The fund close is the first since Aberdeen finalised its acquisition of fund of funds group Flag Capital Management last month.

Aberdeen said it was the second consecutive Flag fund run by the same team to close north of its target.

The fund will invest in a concentrated portfolio of lower mid-market US-based private equity funds, and will seek to allocate 20 percent of the fund to direct co-investments to “enhance yield and  mitigate the J-curve” Aberdeen said.

The group said that capital had been collected from a range of new and existing LPs which primarily consisted of institutional corporate and public pensions, as well as foundations and endowments from the US and abroad.

The asset manager’s head of US private equity, Scott Reed, said the lower middle market remained the least efficient segment of the private equity spectrum with comparatively less private capital available to fund a relatively large amount of active investment opportunities.

“Our strategy is to identify, and build a portfolio of, the best small buyout managers that can capitalise on this inefficiency, with the goal of generating above market returns for our investors,” Reed said.

Aberdeen completed the acquisition of Flag Capital Management in September 2015, adding $7 billion of assets. Combined with the acquisition of US hedge fund group Arden Asset Management in August this year, the group now has a total of $30 billion in alternative assets under global head of alternatives Andrew McCaffery. 

Aberdeen’s global alternatives platform includes multi-manager research and selection across private equity, hedge funds and property, along with direct investments in infrastructure projects. 

 At the end of 30 June 2015 its total assets under management stood at $483 billion.