FLAG approaches target for Fund V

The US-based fund of funds has raised nearly 75% of its target for Fund V, which will continue the firm’s strategy of investing in funds of less than $1bn in size.

Connecticut-based fund of funds FLAG Capital Management has raised about $144 million for its FLAG Private Equity Fund V, which has a $200 million target, according to documents filed with the US Securities and Exchange Commission.

Fund V invests in mid-market and lower mid-market private equity funds typically less than $1 billion in size. FLAG’s prior fund of funds, FLAG Private Equity IV, collected $138 million in 2010.

FLAG declined to comment on fundraising. 

Last October, FLAG acquired Hong Kong-based peer Squadron Capital, a manager of Asian private equity funds on behalf of institutional investors, family offices and high net worth individuals from Asia, Europe, the Middle East and North America. By partnering with Squadron, which had $1.5 billion of assets under management, FLAG brought its total assets from about $4.7 billion to more than $6 billion. The deal marked the first time FLAG has acquired another fund of funds in its 18-year history. 

The fund of funds world has experienced significant consolidation in recent years, with BlackRock buying Swiss Re’s funds of funds business, StepStone Group acquiring Parish Capital and The Carlyle Group snapping up AlpInvest. Funds of funds have been faced with increased pressure on terms due to the extra layer of fees that come with committing to fund of funds and disappointing performance in recent years, according to most independent metrics. 

In addition to its flagship fund of funds, FLAG is also investing its Asia-focused FLAG Asia Partners III fund and a North America-focused venture fund. FLAG Capital was founded in 1994 and invests in venture capital, private equity and real assets.