Quilvest: ‘hard decisions’ needed to stay in mid-market

The fund of funds has chosen to support funds that have 'stayed in their sweet spot rather than those jumping in tremendously in fund size', according to partner Maninder Saluja.

With many managers growing their fund size, fund investors are having to work harder to remain in their mid-market sweet spot, says Quilvest Private Equity, a Paris-based fund of funds.

“It has become increasingly important to make some of those hard decisions to graduate certain names out of our programmes while finding key new names to replace them,” Maninder Saluja, partner at Quilvest PE’s Hong Kong office, said. “Refreshing [the portfolio] with groups that are extremely hungry and that have the right fund size profile is something that we are also very focused on in this market, and that allows us to stay within our preferred mid-market too.”

The average fund size raised to date in 2017 is $737 million, compared with $594 million in 2016 and just $296 in 2010, according to the PEI Q3 2017 Fundraising Report.

The firm has continued to support funds that have “stayed in their sweet spot rather than those jumping in tremendously in fund size”, as well as newer spin-out teams, said Saluja.

The developed markets have had a “very active” year, with a number of “top quality” names coming to market, Maninder Saluja, partner at Quilvest PE’s Hong Kong office, said.

Roughly half of funds in Quilvest’s PE portfolio are managed by emerging GPs or groups with fewer than three prior funds. The ratio is slightly more weighted towards newer fund managers in the emerging markets given the “more nascent” development of private equity in these regions.

Quilvest PE manages approximately $5 billion in assets, according to its website. Since 1972, the funds of funds has committed to over 300 private equity vehicles and invested in more than 150 companies.