Genstar targets as much as $13bn for latest flagship

The mid-market firm raised around $10.2bn for its predecessor flagship in April last year.

Genstar Capital, the US’s 25th-largest private equity firm according to the PEI 300, is in market with its latest flagship less than 18 months after the close of its predecessor.

Genstar Captial XI is targeting between $12 billion and $13 billion, according to a source familiar with the raise. Genstar declined to comment.

Texas County & District Retirement System is due diligencing a commitment to the fund, affiliate title Buyouts reported last week.

The North American mid-market buyout manager disclosed a first and final close on Genstar Capital Partners X in April last year on its hard-cap of approximately $10.2 billion, according to a statement at the time. It also raised an additional $1.5 billion for a pool which would co-invest in the fund’s larger transactions.

Fund X attracted US institutional investors including the California Public Employees’ Retirement System, Oregon State Treasury, State of Michigan Retirement Systems and Texas County.

Genstar oversees assets under management of approximately $35 billion and invests across financial services, healthcare, industrials and software sectors, according to its website.

The pace of fundraising for North American firms slowed in the first quarter of this year, as uncertainty, a crowded marketplace and overallocated LPs stifled activity, data from Buyouts shows. Some 164 private equity vehicles secured almost $132 billion, down 24 percent from a year earlier.

Several large listed alternatives players have expressed confidence in the unimpeded progress of their offerings, citing the growing tendency of many LPs to favour large incumbents. Such comments are supported by data showing a rising share of LP capital going to fewer funds.

Supply challenges – which could result in longer fundraising timelines or delayed fund launches – will not spare large GPs, Drew Schardt, Hamilton Lane’s head of global investment strategy told PEI’s US Mid-Market Report 2022, nor will they unduly punish smaller ones.

“This is not a zero-sum game,” Schardt said. “Most LPs recognise the value of diversification, of accessing different segments of the market. They know, ‘If I’m only doing large and mega-managers, I’m missing out on alpha.’”