Rothschild has held a final close on €259 million for Five Arrows Secondary Opportunities III, it said in a statement. The fund took only “a few months” to raise, the bank said, and beat its target of €200 million.
Capital from the fund has already been used to acquire a portfolio of 17 European mid-market companies from an unnamed financial institution, Rothschild said.
The fund targets European small to mid-cap secondary private equity deals, “a niche segment that continues to present attractive investment opportunities,” according to the bank.
Marc-Olivier Laurent, head of Rothschild’s merchant banking division, said in a statement: “FASO III’s easy fundraising effort, in a gloomy economic environment, confirms that innovative private equity funds remain high on the agenda of investors seeking opportunities that can preserve capital and also generate alpha in an adverse cycle.
“FASO III’s focus on tailored liquidity solutions, in a market segment that falls below the radar of large publicised auctions, presents significant opportunities. We expect the current market environment will generate a steady flow of opportunities from sellers seeking liquidity driven by economic uncertainty, new regulatory constraints or simply the need to exit the asset class,” Laurent added.
Mireille Klitting, general manager of the fund, argued that purchasing mature portfolios of funds, shares or direct companies “significantly mitigates the risks associated with private equity investing … offering a mix of attractive returns with a quicker payback which de-risk transactions early on following the deployment of capital.”
Rothschild’s fundraising follows a week after Switzerland-based Akina held a first close for its latest European SME-focused fund, Euro Choice V, on €174 million.