Pomona’s fifth secondaries 45% oversubscribed

On the back of a strategy based on non-competitive deal-sourcing, Pomona Capital has raised $582m for investment in limited partnership interests.

Pomona Capital, the global private equity manager, has closed its fifth secondaries fund on $582m in investor commitments, $182m above the original target.

The fund, which was launched a year ago and in the course of the past six months has already committed $140m to investments in limited partnership interests, aims to proactively select investment opportunities away from the auction process.

Commenting on the fundraising, Michael Granoff, president and CEO of Pomona, said: 'We’ve always believed in raising relatively modest amounts for our secondaries funds, which enables us to avoid competing for deal flow with the very large funds that are in the market place. This market is getting more efficient, but we aim to operate in the least efficient part of it, where we can source investments away from the auction process. The response that we’ve had from investors shows that this strategy mirrors the views that many limited partners hold about the secondaries market.'

Granoff also said that the fundraising benefited from substantial limited partner interest in secondaries products generally: 'Investors are keen to take advantage of some of the problems that have been created in the market over the past couple of years, not just be victims of them.'

Pomona, which now has $1.3bn of capital under management, is aiming to invest the fund over the course of the next two to three years. Said Granoff: 'We tend to be very cautious with regards to asset quality and pricing. It’s taken us twice as long to invest Fund IV than its predecessors. Now conditions are improving, but we are not in hurry.'

Investors in the new fund include a global group of financial institutions, pensions, asset managers, corporations, endowments and family groups.

Founded in 1994, Pomona operates out of offices in New York and London. Alongside its secondary programme, it also manages three primary interest funds of funds.

Secondaries funds are among the most popular private equity offerings in the market at present. A strong indication of limited partner appetite was the recent closing of Coller Capital’s fourth secondaries fund, which raised $2.5bn. Several other firms, including Lexington Partners and Green Park Capital, are also raising capital at the moment.

According to Granoff, prospects for Pomona’s latest new fund are encouraging: 'What is different about the current environment is that for the first time there are macro factors affecting every investor in the asset class. There is generally more distress in the financial world, and over-allocation is an issue for everyone. But I don’t expect the kind of tidal wave of completed transactions that some of the big funds seem to be projecting. A tidal wave would mean large-scale selling from large-scale holders of positions such as pension funds. We’re not seeing that.'