Quadrant closes sixth fund on A$750m

The Australian mid-market manager was in the market for just two months and beat its A$600m target.

Sydney-based Quadrant Private Equity has closed its sixth fund on A$750 million ($745 million; €558 million), Chris Hadley, managing director, confirmed to PEI Asia.

Quadrant’s fundraising success draws a line under a period of drought for Australian private equity firms and shows that – post-downturn – firms with the track record are able to raise capital. 
The fund, which was only in the market for two months, beat its A$600 million target and was the first Quadrant fund to raise money from overseas investors. Around one-third of its LPs are from Europe and Asia. 
Mid-market investor Quadrant closed its fifth fund, fully invested in five deals according to the firm’s website, on A$500 million in 2007. As of June 2010, that fund was recording a gross IRR of 16 percent, the website states. Quadrant’s first fund, raised in 1996, garnered A$50 million in capital and made 16 investments for a gross IRR of 24 percent.
Besides the global downturn in private equity fundraising, Australian mid-market GPs have been faced with the additional challenge of diminishing appetite from their core LP base – the country’s superannuation fund industry. Super funds, which have typically had their private equity exposure concentrated in local funds, have recently begun a trend towards global diversification in search of a better returns profile.
“Super funds would back say six [Australian] firms and find that not only were they all bidding on the same assets, but they would often club together on deals too… Not quite the diversification they were looking for,” one Australian GP explained to PEI Asia earlier in the year.
In this doubly constrained fundraising environment, many in the industry have been predicting a “survival of the fittest” scenario, with only those firms able to prove their worth through performance able to move forward and bring in fresh funding.
Another firm which has been seen to make the grade with LPs, albeit at a much slower pace, is CHAMP Private Equity, which is due to close its third buyout fund on A$1.5 billion before the end of the year. The firm, which began fundraising in 2009, reached a second close on close to A$1 billion in April this year.
Quadrant has had a fairly active 14 months. It took outdoor clothing store Kathmandu to a successful A$375 million IPO in late 2009, one of only two firms to take advantage of the small window of opportunity that opened (the other being TPG Capital with Myer Group) on the Australian Securities Exchange. It then sold temporary fencing provider ATF Services to CHAMP Private Equity for an undisclosed sum in July 2010 in Australia’s first tertiary buyout.
On the investment side, the firm acquired pan-Asian media intelligence company Media Monitors for a reported A$160 million in July.