Baar-headquartered Montana Capital Partners has collected €80 million for the Annual Secondary Program, its debut vehicle.
Having held a first close in January on €30 million, it was rapidly oversubscribed, the firm said in a statement. Launched in the autumn of last year, the fund had an initial target of €50 million.
Its investor base mainly comprises large family offices from Switzerland, Germany, Scandinavia and the UK, Christian Diller, a partner and co-founder of Montana, told Private Equity International. One asset manager and one pension fund also committed to the fund, he said.
Diller started Montana together with fellow co-founder Marco Wulff in 2011, with a view to provide exit routes for LPs in search of liquidity. Both had previously worked at Capital Dynamics.
The firm's maiden vehicle derives its name from its innovative structure: its investment period runs for only one year after the final closing, and the fund is due to start returning cash to investors three years after this initial phase. It has a total life of seven years.
Holding a first close, and completing our first transactions, helped fundraising a lot as it provided investors with a high quality solution to access smaller secondary deals
Given the restrained fundraising environment of the last 12 months, Montana’s main challenge had been to get to the first close and demonstrate a capacity to source investments, Diller said. “Many investors were convinced that the small end of the secondary market is very attractive, but did not know how to access it. Holding a first close, and completing our first transactions, helped fundraising a lot as it provided them with a high quality solution to access smaller secondary deals.”
The vehicle’s original structure had been a critical factor in the success of its fundraising, he explained. By accelerating distributions and limiting J-curve effects to the bare minimum, it drew support from a class of investors looking to generate high returns without binding themselves in a structure of 10 years or more.
The fund will focus on secondary transactions in small to mid-market buyout funds, but also is open to buying stakes in larger funds as well as fund of funds. The majority of its investments are to be made in Europe, but the firm also will allocate capital to other parts of the world, Diller said. In particular, he expects 30 percent of the vehicle to be invested in the US, while up to 20 percent could go towards emerging markets.
The fund is likely to offer co-investment facilities to its LPs, which will be decided on a case by case basis. It has already made several investments this year, according to Diller.