Partners Group bulks up with directs

The firm is in market with its latest direct vehicle for private equity and expects to launch dedicated direct funds for real estate and debt within the year.

Partners Group expects its direct equity strategy to significantly contribute to fundraising over the next 12 to 18 months, the firm said on its H1 2019 AUM call on Tuesday.

The firm is in market with Partners Group Direct Equity 2019, its fourth global buyout fund, which is reportedly seeking up to €5 billion. It also expects to launch direct flagship offerings for real estate and infrastructure within the year, Philip Sauer, co-head of group finance and corporate development at Partners Group, said during the call.

Direct investments made up the largest part – 60 percent, or $4.1 billion – of a total $6.9 billion invested in private markets in the first half of the year, consistent with prior years. The remainder was made up of portfolio assets such as secondaries and primary fund commitments. Thirteen direct transactions were completed in North America, 14 in Europe and two in Asia and emerging markets.

Capital raised for private equity amounted to €4 billion, more than half the total capital raised by the firm in the first half of the year. This was through a mix of different funds raised, as well as semi-liquid strategies and customised mandates. Sauer added that the firm’s next-generation flagship programmes contributed the most in the past six months to fundraising.

The firm saw solid client demand across all private markets strategies and received total new commitments of €7.4 billion in the first six months of the year, compared with €6.2 billion in the first half of last year. Fundraising was spread over 20 individual programmes and numerous mandates. The firm also reconfirmed its communicated expected range of up to €16 billion in new client commitments for the full year 2019.

Investment activity in H1 2019, however, was not quite up to investment levels achieved in 2018. Investors were cautious and prime assets were sold at aggressive prices in the first quarter, while the second quarter saw a rebound, said David Layton, co-chief executive at the firm.

He added that the firm is seeing much more consistent sentiment and transaction activity moving into the third quarter, with meaningful potential for some upside in the second half of the year.

The firm has also been continuing to build its investment capacity: headcount is up 10 percent from 1,204 employees at the end if 2018 to 1,326 at the end of June. It expects its staff to grow to more than 1,500 by 2020.