Neuberger Berman, which spun out from failed investment bank Lehman Brothers, has raised $720 million for its first fund of funds since winning its independence.
The fund had a target range of between $700 and $750 million and a hard cap of $1 billion. The amount raised is $500 million short of its previous fund, which was raised during the 2006 boom.
The firm has been fundraising for a year and half, having asked for an extension from its advisory board, according to a source close to the matter. The source confirmed there is a mixture of old and new investors, with notable interest from Japan.
The fund will make investments globally, without specific geographical or sector focus. A source close to the firm stated that most of the capital is likely to be deployed in North America and Western Europe as they have the most established private equity markets.
The source stressed that finding the right fund managers was of the utmost importance and geographical diversification would not outweigh that as a priority.
Tony Tutron, global head of alternatives at Neuberger Berman, said in a statement: “We see attractive investment opportunities in private equity in the coming years, but it is important to be selective.”
Neuberger will invest in large and small-cap buyout, distressed and venture capital funds. The fund of funds has already committed 50 percent of its capital, and has more commitments in the pipeline according to a source close to the firm.
As of 31 October 2011, the fund, NB Crossroads 2010, has made 19 commitments to funds, 7 co-investments and acquired 15 secondary interests in private equity funds, according to the press release.
Since the last fund, Neuberger has also increased its allocation to special situations and distressed investments, as well as favouring small-cap buyouts. Large-cap buyouts and venture capital are slightly more underweighted than the others but will still receive investments.