New York-based Paul Capital has closed its ninth private equity secondaries fund on $1.65 billion (€1.01 billion) – in excess of its $1.5 billion hard cap and $1.25 billion initial target. The firm raised the hard cap “largely due to larger commitments”, Paul Capital partner David de Weese told PEO.
The fund will focus on the acquisition of secondary private equity portfolios, including interests in limited partnerships and portfolios of direct investments. The fund expects to put its capital to work in approximately three years and will seek to diversify in terms of strategy, industry, geography and vintage, de Weese said.
Paul Capital looks to invest in buyout portfolios in the small and middle-end of the market, avoiding later vintages. The fund will also invest in growth equity and later stage venture capital. The fund is open to investments in all industries with the exceptions of real estate and oil and gas. In contrast to previous funds, Fund IX will have a larger allocation to the emerging markets, up to 20 percent. Vintages will generally range from 1999 to 2004.
Investors include endowments, public and corporate pensions, sovereign wealth funds and family offices. More than 50 percent of commitments were from public and corporate pension plans, with the majority of LPs repeat investors, de Weese said.
Paul Capital expects to offer a substantial amount of co-investment opportunities on larger transactions, according to de Weese. The firm is currently considering a $400 million transaction in Eastern Europe. The fund’s predecessor vehicle closed on $960 million in October 2004, with close to $500 million in co-investment from LPs.
Secondary transactions have become a more accepted tool for managing a portfolio, said de Weese. “Increasingly, banks, insurance companies, pension funds, family offices, and other holders of private equity are turning to us to help them trim their portfolios and manage risk exposure and liquidity,” de Weese said in a statement.
Paul Capital manages $6.6 billion in capital commitments across three investment platforms including private equity secondaries, healthcare royalty and revenue interests and venture capital fund of funds. More than $4.2 billion is dedicated to the secondary private equity market, where the firm has been active for more than 15 years.
The firm has become increasingly global, adding offices in São Paulo and Hong Kong last year to its existing offices in New York, San Francisco, London, Paris and Toronto. Paul Capital was the first secondaries firm to open an office in Latin America, said de Weese.