The Sixth Cinven Fund has benefited from a move within the public pension fund community to increase allocations to alternatives.
A large proportion of the capital committed to the fund, which closed on its €7 billion hard-cap, came from public pension funds. Cinven raised the fund, which it said was oversubscribed by two times its target, in just four months. It is understood that Cinven made a GP commitment to the fund of around 2 percent.
Investors in the fund include the New York State Teachers’ Retirement Fund, which committed $200 million, Teacher Retirement System of Texas, which committed more than $340 million, and Washington State Investment Board, which committed more than $300 million, according to PEI Research & Analytics.
In terms of timing, “we were intentionally out of the market by April,” Cinven corporate affairs director Vanessa Maydon told Private Equity International.
“We were always keen to raise a fund that was reasonably consistent with what we’d raised previously and maintain that investment discipline.”
Geographically, the investor base was split broadly in line with the previous fund, the €5.3 billion Fifth Cinven Fund, a 2012-vintage. Around half of the LPs in the latest fund are from the Americas, a third from Europe, and the rest from Asia and the Middle East. However, there was a slight increase in commitments from Europe and Asia and a corresponding decrease from the US and the Middle East.
It is understood that pressure on Middle Eastern investors from changes in the oil price resulted in smaller commitments to the fund. In line with that, the fund attracted slightly less interest from sovereign wealth funds than the firm’s previous offering.
Commitments from funds of funds, although not a large percentage of the fund, almost halved from the prior fundraising.
The latest fund also attracted more commitments – both in terms in number and size – from Latin American LPs, said Maydon.
The next investment Cinven makes will be from the new fund; its predecessor made its final investment earlier this year. Maydon said the firm is re-evaluating its pipeline in light of the referendum vote, although the majority of potential opportunities are expected to be unaffected by the outcome.
“What we’re now looking at is more to do with how you price risk and the opportunities that come out of potential dislocation,” Maydon said.
“Since Friday we’ve clearly had questions from LPs and what the impact of [the referendum] is.”
Co-investment will remain a big part of Cinven’s strategy in deploying this fund.
“Our whole approach to co-invest is much more robust; we’re far more methodological about it now. As we get to know our LPs better, we know what they like and don’t like, and what we can therefore show to them early on.”