Partners hits €2bn hard-cap for secondaries

The firm has already put one-fifth of its over-subscribed new fund to work with an eye to invest more in Asian secondaries than ever before.

Partners Group has collected €2 billion from investors for its latest secondary fund, Partners Group Secondary 2011.

The fund, which reached its hard-cap, was oversubscribed and closed before the end of its fundraising period, according to a statement. It began fundraising in 2011, according to PEI’s in-house data base PE Connect.

The secondaries fund attracted “substantial interest” from both existing LPs as well as from new investors, Partners Group said. In addition, the Zug-headquartered firm said the overall balance of LPs showed a “high level of geographic diversification”. The firm declined to comment on the geographical scope of its LP base.

The new vehicle will also invest more money in Asia than its predecessor, the firm said, due to the increased maturity of the region’s private equity market. “With a total of six offices in Asia-Pacific and emerging markets, we have one of the largest dedicated secondary investment teams in the region,” Stephan Schäli, a partner and head of private equity at Partners Group, said in a statement.

Short term cycles will continue to exist. For example the selling of large portfolio banks may contract over the next two to three years, but overall activity will increase

Stephan Schäli

Partners Group said that regulatory changes and record levels of primary fundraising had been driving growth in the global secondary market, with an increasing number of institutional investors needing to rebalance their private equity exposure.

Last year, the firm identified a record $70 billion-worth of secondary opportunities, Partners Group said. “Global private equity secondary markets continue to provide a wide range of attractive investment opportunities. We have already committed over 20 percent of the fund to a diversified cross-section of assets which are showing a strong performance overall,” Schäli added.

Although the secondary market performed strongly in the first half of this year – with about $13 billion of deal volume, according to broker Cogent Partners – activity has slowed down since the summer, Private Equity International reported last month. Market sources blamed global macroeconomic uncertainty, uncertainty surrounding the US elections, volatility in the eurozone and finalisation of several regulations in the industry. But most observers expect the market to pick up again next year. “There’s a ton of deal volume to come in the next three to five years,” Todd Miller, a managing director with Cogent told PEI in November.

This view was echoed by Partners Group. “Short term cycles will continue to exist. For example the selling of large portfolios by banks may contract over the next two to three years, but overall activity will increase,” Schäli said.