Private Equity News & Analysis

Hermes reaches target on fourth co-invest fund – exclusive

The firm held a first close on Hermes GPE PEC IV Co-Investment Fund, which has a $500m hard-cap.

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Hermes GPE has held a first close on its fourth co-investment vehicle, Private Equity International has learned.

The UK-headquartered fund of funds manager has reached the $350 million target for Hermes GPE PEC IV Co-Investment Fund, which has a $500 million hard-cap, according to a source familiar with the vehicle.

It is unclear when the fund expects to hold the final close and Hermes declined to comment.

Fund IV’s predecessor closed on $389 million in 2017 with commitments from LPs such as Ardian, State Teachers Retirement System of Ohio and Canada Pension Plan Investment Board, according to PEI data.

PEC III charged fees on a net asset value basis after the first year of formation and included a 10 percent hurdle.

“We’re substantially lower than [the industry norm] because we think those fees are excessive,” head of private equity Peter Gale told PEI in 2017.

Co-investments have been growing in recent years with the value of such deals hitting $104 billion in 2017, according to data from McKinsey. Nearly two-thirds of LPs plan to invest in co-investment opportunities over the next year, according to Private Equity International’s LP Perspectives Survey 2019.

Hermes continues to pursue a fund of funds strategy through SMAs and manages a £1 billion ($1.3 billion; €1.1 billion) private mandate for the £52 billion BT Pension Scheme, according to PEI data. The firm, which is invested in 250 funds and 192 co-investments globally, manages around £8 billion of private equity assets, according to its website.