One Equity raises $1.65bn for first fund after spinout

One Equity Partners has closed its first fund since spinning out from JP Morgan in 2015 with commitments from various types of limited partners.

One Equity closed One Equity Partners VI on $1.65 billion, above its $1 billion target and its $1.5 billion hard-cap, according to One Equity managing director and head of investor relations David Lippin.

Lippin told Private Equity International that One Equity began fundraising a little over a year ago and was oversubscribed by several hundred million dollars.

“We had to cut investors back because we didn’t want to be more than 10 percent over the cap,” Lippin said. “We committed about 3 percent ourselves [as the GP commitment]. We actually cut ourselves back as well, because we didn’t want to be increasing GP commitment when we’re cutting back LP commitments.”

The LP base spans North America, Europe, Asia, Australia and the Middle East, Lippin said. He added that the largest category of Fund VI’s LP base is family offices, followed by financial institutions, sovereign wealth funds and superannuation funds, private pension funds, consultants and insurers.

One Equity was the in-house private equity arm of JP Morgan and spun out in January 2015, according to Lippin. At the time of the spinout, the bank sold a large portion of One Equity’s portfolio to Lexington Partners in a stapled secondaries transaction, as reported by sister title Secondaries Investor.

When One Equity spun out, Lexington bought a number of companies from JP Morgan and gave One Equity $500 million in capital to make initial investments as a standalone entity, Lippin said. That $500 million is not included in this latest fundraising amount.

In terms of capital deployment, Fund VI has already made eight platform acquisitions, and a ninth deal has just been signed and will close next month, Lippin said, adding that there are also eight add-on acquisitions that have been closed.

A statement from One Equity released on Tuesday said the fund has invested or committed about $600 million to date.

The fund invests between $30 million to $150 million in equity, averaging around $100 million, before any LP co-investment capital. The companies it pursues are in the technology, healthcare, manufacturing and consumer sectors, and have an enterprise value of about $750 million, and One Equity may acquire two businesses at the same time to merge them, or buy them one after the other.

One Equity relies heavily on proprietary deals to achieve synergies and business growth and often acquires two companies and merging them into one. For example, this latest ninth deal has involved a dialogue with the company for 27 months.

Lippin said he expects the fund to be fully deployed in the next one or two years.

Information on the previous fund, One Equity Partners V, was not available. According to PEI data, One Equity Partners III raised $3 billion in 2008.

Performance metrics, such as the net internal rate of return, for One Equity's previous funds were not available.