Pollen Street raises more than £1bn, adds capital for top-up fund

The business and financial services-focused firm raised at least £335m for a top-up sister fund and a co-investment vehicle, as well as its fourth flagship fund.

London-based Pollen Street Capital has gathered more than £1 billion ($1.3 billion; €1.2 billion) for its latest pool of capital for private equity, boosted by new LPs, with more from North America and Asia.

The mid-market firm closed Pollen Street Capital IV on its £700 million hard-cap, surpassing its initial target of £600 million, according to details by the firm shared with Private Equity International.

It also raised more than £150 million in co-investment capital and more than £185 million for PSC Accelerator, a dedicated top-up fund, which also serves as a continuation fund for some deals from its prior vehicles.

Fund IV is nearly 75 percent larger than its 2016-vintage, £402 million predecessor. It gathered commitments from public and corporate pension funds, insurance companies, sovereign wealth funds, endowments and foundations, asset managers, banks, and family offices, according to a statement shared with PEI.

Rhode Island State Treasury committed $50 million to the fund, according to PEI data.

Fund IV also gathered capital commitments from Asian investors for the first time, which made up slightly more than 10 percent of the LP base, Lindsey McMurray, managing partner and co-founder of Pollen Street, told PEI. She added that there were more North American investors in the latest vehicle compared with prior funds.

“We’ve expanded our investor base into North America and Asia, giving us even further capacity to do larger deals with these strategic investors,” she said.

Fund IV had a high re-up rate, with almost all existing LPs backing the fund, McMurray noted.

Capital raised for the vehicle and its companion funds has already been deployed across six deals, representing more than £300 million, or about 60 percent of commitments. These include fund administration software company Pacific Fund Systems, mobile phone top-up service Ding and Polish online payments provider Blue Media.

The firm is looking to invest in up to 12 European companies focused on financial and business services.

Pollen Street is targeting a 3x return and 30 percent IRR for Fund IV, according to McMurray.

With frenzied dealmaking and greater competition for assets expected to continue into 2022, McMurray noted that the firm will be “more selective” about deploying capital in the coming year.

“It’s that endless balance of not missing out on great businesses because everything is coming to market. We are looking at a number of them but pacing ourselves accordingly,” she said.

Europe-focused funds gathered $48.1 billion from January to September this year, an 11 percent increase on the equivalent period last year, PEI’s third-quarter fundraising report found. Deals focused on EMEA reached $391.2 billion across 1,839 transactions, representing the busiest Q1 to Q3 period in at least five years, according to a report from Dechert.

Pollen Street is in the market with its latest credit fund and has raised more than £300 million as of August, affiliate title Private Debt Investor reported (subscription required). The firm sold a passive minority stake to Capital Constellation last year.