Sydney-based Pacific Equity Partners’ fifth private equity vehicle expects to raise about A$800 million ($717 million; €521 million) toward a first close by the end of March, a source with direct knowledge of the matter revealed to Private Equity International.
Although PEP has been speaking to investors for almost a year, the firm officially launched the A$2 billion vehicle in November.
PEP declined to comment on fundraising matters.
The A$2 billion fund will be accompanied by a co-investment vehicle, through which the firm expects to deploy an additional $1 billion in co-investments over the duration of the fund life.
“The feedback from investors is that the desire to co-invest alongside the fund is strong and so part of shaping the size of the fund has been driven by that,” PEI’s source explained.
Fund V is smaller than its A$2.7 billion predecessor, which had another A$1.3 billion raised in a supplementary fund for co-investments. Fund V is now roughly 75 percent deployed, with around half of the co-investment tranche deployed.
“At the moment [the new fund] is looking healthy, they are pleased with the response and think it is going to be a good, strong first close.”
PEP expects a strong re-up rate from existing investors, but has allowed room for new LPs. Fund V is PEP's first vehicle that will raise significant amounts of capital from the Middle East and Asia, typically seeing 80 percent of its capital commitments from North American and European LPs, PEI's source said.
PEP is one of the only local Australian GPs that raises a majority of its funds from offshore investors, although this is starting to change as more country managers tap overseas capital, industry sources say.
The fund's forecasted first close comes after PEP distributed A$1.6 billion to investors during 2013, about A$1 billion of which happened in the final quarter of the year, the source added. He believes the underlying performance of portfolio companies allowed the firm to make significant refinancings and recapitalisations.
Toward the end of the year, PEP refinanced The Spotless Group and Peter’s Ice Cream, as well as selling around 50 percent of share-registry business Link Group to a consortium including Macquarie Group and Intermediate Capital Group for an undisclosed sum.
During July and August, the firm refinanced Australian cinema chain Hoyts, New Zealand biscuit maker Griffin’s Foods and Link, generating about A$550 million. The firm returned another $35 million back to LPs through performance dividends.
PEP is an Australian private equity firm set up by a group of former Bain & Company executives. It has about A$6 billion in assets under management and has made 23 investments since its founding.