Portfolio Advisors raises $910m for secondaries

The fund of funds manager fell just shy of its $1bn target.

Portfolio Advisors, the US-headquartered fund of funds manager, has closed its global Portfolio Advisors Secondaries Fund II (PASF II) with total commitments of $910 million. ??

The firm's first dedicated global secondaries fund closed on $1.1 billion in 2009 and invested opportunistically across private equity, real estate and credit strategies.

Fund II focuses purely on global private equity, in part because some of the firm’s LPs had asked Portfolio Advisors to separate strategies, according to managing director Brian Murphy. Last year the firm closed a $150 million real estate-focused secondaries fund and launched a credit vehicle as well as an Asia-focused fund.

LPs in PASF II include private and public pension plans, university endowments, private foundations, insurance companies, family offices and high net worth individuals, according to a firm statement that noted some 80 percent of commitments came from existing investors. It received commitments from LPs including the Coleman Foundation and the San Francisco Employees’ Retirement System, according to PEI Research & Analytics.

The firm began fundraising in March 2012 and used several placement agents to help: HSBC in Europe and Asia; Fortress Group in the US, and Lytton in Canada.

Murphy noted the secondaries market at present was particularly tough for buyers given high prices and an increasing number of market participants. “We’re now being outbid on at least 50 percent of our bids, so instead of 5 percent successful bids, our total is just above 2 percent.”

He said the firm’s secondaries track record has been strong, with the IRR on Portfolio Advisor’s first secondaries fund had now at 20 percent, and Fund II already showing a positive IRR. It was unclear at press time how much of the fund had been deployed to date.

Portfolio Advisors has $30 billion in assets under management and has completed more than $2 billion in secondaries transactions since 2003, according to its website.