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Adams Street moves ahead with secondary fundraising

The firm’s fifth global secondaries fund could collect at least half of its $750m target by March, giving Adams Street hefty buying power in what is expected to be an intense deal environment during the first two quarters.

Adams Street Partners is eyeing a first close on its fifth global secondaries fund in March or April, at which time it will have collected at least half of its $750 million target, according to two people with knowledge of the process.

The Chicago-based firm declined to comment.

Adams Street, which runs funds of funds and investment vehicles for secondaries, direct and co-investments, launched Adams Street Global Opportunities Secondaries Fund 5 last fall. The firm has been focusing on secondary investments since 1986. Through its first four funds, Adams Street managed more than $3.5 billion in secondary assets across roughly 100 deals, according to its web site. The firm closed its fourth secondaries fund in 2009 on $730 million.

Adams Street also raises a global fund of funds each year, which it is marketing along with the separate secondaries fund. Adams Street expects to collect more than $1 billion for the global fund of funds and close fundraising at the end of the first quarter, one source told Private Equity International.

Last month, the Contra Costa County Employees’ Retirement Association committed $40 million each to the global fund of funds and the secondaries fund.

The secondary fund is being raised in a year that could include intense secondary activity, sources have told Private Equity International. Last year was one of the busiest-ever in terms of deal volume in the secondaries market, though activity slowed in the latter months as the intensifying European debt crisis rocked the public markets.

Sellers who pulled back late last year as the markets wobbled are likely to come back, or have already hit the market this year, one secondary investor source said.

“There are more pensions that have been sitting over the past few months that intended to bring something to market by the end of the year, but when the August uncertainties hit, they pulled in their horns,” the source said. “They wanted to wait for third quarter [GP reports], and now they want to wait for fourth quarter reports. There’s a fairly good line of large pensions looking to move product basically waiting for fourth quarter reports,” the source said.

Another source said sellers include more than just pensions: “A lot of people pulled back around August … I wouldn’t say it’s just pensions. It’s pensions, banks, endowments, all types of sellers. The bulk is still banks and financial institutions.”