Dyal eyes more than $8bn for latest PE fund and ponders 2020 return

The fund initially targeted as much as $6bn and was due to close on more than $7bn in the first quarter of this year.

Dyal Capital Partners, Neuberger Berman’s GP stakes unit, has increased its appetite for its fourth fund to more than $8 billion.

The firm has already raised around $7.7 billion for Dyal Capital Partners IV and is expected to hold a final close on as much as $8.5 billion before year-end, according to a source with knowledge of the vehicle.

It had initially targeted as much as $6 billion and was due to close on more than $7 billion in the first quarter of this year, PEI previously reported.

It is understood the firm is considering returning to market with Fund V in 2020.

Dyal Capital Partners declined to comment.

The move comes amid a report by the Wall Street Journal that Dyal is shopping a debt product to private equity firms. The open-ended, permanent capital vehicle collected $1 billion in January from existing Dyal investors and is expected to raise more than $5 billion.

Dyal’s equity funds targets 10-20 percent stakes in alternative asset management, typically in exchange for a 20 percent share of management fees and 10 percent of carried interest flows. Its 38-strong portfolio includes California tech giant Silver Lake and debt firm American Securities.

GP stakes are big business. Morgan Stanley Investment Management became the latest to enter the fray after its May investment in Tikehau Capital Advisors, the main shareholder of listed French private equity manager Tikehau Capital.

GP stake vehicles traditionally favour managers with between $10 billion and $25 billion in assets under management, a segment that is at risk of becoming oversaturated, according to PitchBook’s Raising the GP Stakes. Fewer than 50 managers in this category are unlisted or not backed by private equity.

Pressure to deploy capital and a smaller opportunity set could prompt GP stake funds to target smaller managers, the report noted. None of the GP stake investments completed so far this year have been in managers with more than $20 billion of AUM.