Conversus Capital will once again consider making new private equity investments following an almost two year period during which the firm implemented a realisation strategy of managing its existing portfolio of funded investments and unfunded commitments.
“Part of that strategy was to focus any excess cash on repayment of debt and the funding of capital calls,” said Tim Smith, chief financial officer of Conversus.
The Euronext-listed fund of funds ended 2010 with over $350 million of net positive portfolio cash flow and $75 million of net cash on its balance sheet. While it will consider commitments to new funds, Conversus expects to initially transact secondary deals and make direct co-investments.
“In the short term, the reality is secondary transactions and direct co-investments will most likely be more attractive than commitments to new funds, and that’s just because of the return profile,” Smith said.
Conversus currently has commitments to 207 funds from 118 general partners.
The fund of funds joins a host of limited partners looking to commit to private equity in 2011. According to a recent Coller Capital survey of 120 private equity investors from around the world, 81 percent of LPs will add new GP relationships within 2-3 years.
In addition to broadening its investment policy, Conversus has also commenced a tender offer to buy back a portion of its outstanding shares with a price range of $20 to $22 per share, or up to $75 million.
“Ultimately the goal is to maximise NAV per unit,” Smith said. “We’re a public company, and that’s what we’ll continue to do.”
Looking ahead, Conversus is anticipating an uptick in private equity fundraising and a stable realisation environment.
“I think the fundraising environment seems to be picking up with new funds, and that’s going to be a theme in 2011 and 2012,” Smith said. “We expect the realisation pace broadly for private equity to maintain itself at levels seen in 2010.”