Hg is set to collect at least £6 billion ($7.8 billion; €7 billion) for its ninth mid-market buyout fund and second upper mid-market fund, Private Equity International has learned.
The London-based firm is targeting £3 billion for Hg Genesis 9 and expects to hit a first and final close this month, according to investment committee documents prepared by Hamilton Lane for the Pennsylvania Public School Employees’ Retirement System dated 11 February.
The firm is also seeking £3 billion for Hg Saturn 2 and is set to hold a final close in the same month, according to a separate document on Saturn 2.
Genesis 9 has a hard-cap of €4.4 billion, while the firm does not expect to raise more than $4.9 billion for Saturn 2, according to the documents.
Hg will make a GP commitment of at least 2.5 percent to both vehicles.
Consistent with recent prior funds, capital raised for Genesis 9 will primarily target northern European mid-market software and technology services companies with enterprise values of between €500 million and €1.5 billion, according to the document. Typical equity cheques are between €200 million and €600 million.
Meanwhile, capital from Saturn 2 will target eight to 10 companies in the same geography and sector with enterprise values greater than €1.5 billion. Typical investments will be between €325 million and €600 million with LP co-investment in every deal, according to the document.
Within the software sector, the firm is focused on sub-sectors including tax and accounting, ERP and payroll, legal and compliance, automotive, SME software and services, capital markets and wealth management IT, insurance and healthcare IT.
The firm is also in market with a lower mid-market focused buyout fund, Hg Mercury 3. It is unclear how much Hg is targeting and how much it has raised thus far.
Hg’s earlier vehicles have generated attractive returns for investors. The 2013-vintage, £2 billion Genesis 7 was delivering a 20.4 percent net internal rate of return and a 2.0x return multiple, while the 2017-vintage, £2.6 billion Genesis 8 is showing a 36.2 percent net IRR and 1.2 percent multiple, as of 30 September 2019.
Hg declined to comment on fundraising.
– An earlier version of this story cited the PSERS document showing Genesis 9’s hard-cap in sterling; this should have been euros.