Exclusive: SL Capital raises $190m for secondaries

The Edinburgh-based firm has already invested nearly a third of its debut secondaries vehicle

SL Capital Partners, the private equity arm of Edinburgh-based Standard Life Group, has raised $190 million for its maiden secondaries fund, PEI has learnt.

The fund held a final close in February, after holding a $120 million first close towards the end of last year, Patrick Knechtli, a partner at SL Capital, told Private Equity International.

The firm kicked off the fundraising after it found a cornerstone investor in the middle of last year. That undisclosed investor is not the largest LP in the fund, however. The vehicle did not have a specific target, but SL Capital had hoped to raise around $100 million, Knechtli added.

The vehicle attracted 10 LPs in total, of whom nearly 50 percent were new investors. LPs in the fund are primarily pension funds, although the vehicle also attracted a large family office. Roughly a third of the investors came from North America, while approximately two-thirds came from the UK.

SL’s secondary fund will focus on niche areas of the secondary market, acquiring small portfolios or single LP stakes. “The aim is to target niche areas in the secondaries market and focus on areas where SL Capital has a competitive advantage through our primary platform, i.e. when we know the managers and the underlying assets well already. It is also targeting smaller deals that other secondary players wouldn’t focus on.”

The deal size could range from $5 million at the lower end up to $50 million for a specific fund, he said. “In theory, if the perfect portfolio deal came along we could invest the fund in one transaction, provided there was a degree of diversification across funds and managers.”

While this is SL’s debut secondary fund, the firm has been investing in secondaries as part of its fund of funds programme. However, SL was seeing deal opportunities that didn’t fit with its existing vehicles. It then decided to raise a dedicated secondaries fund so it would have “more flexibility and firepower”, the firm said.

“We were seeing some very attractive deals that either fell outside the strategy of the fund of funds that we manage or where we already had existing exposure and we couldn’t take any more, which was frustrating because in many of these situations we were extremely well-positioned with the manager and sometimes with the seller,” added Knechtli, who joined SL Capital in 2009 to lead the firm’s secondary activities after eight years at Coller Capital.

The fund, which will be invested in three years, has already made a number of acquisitions and is nearly 30 percent deployed.