Private Equity News & Analysis

Side Letter: Brookfield’s $25bn cut-off; Mubadala’s GP-led; Lazard’s new fundraiser

Brookfield says $25 billion could be the upper limit of its future flagships. Plus: Mubadala's third-party management unit has completed another secondaries deal and Lazard has tapped a Credit Suisse fundraiser in Asia. Here's today's brief, for our valued subscribers only.

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They said it

“While it’s probably necessary to pay up for a quality company, the danger is in the overzealous quest of many PE firms who may be bent on deploying capital and are bidding up the price on companies that are just of average quality at best.”

Jay Lucas, a former Bain & Co PE consultant and founder of market intelligence firm The Lucas Group, tells PEI the amount of available capital for PE is far outstripping the supply of quality deals.

Just happened

Brookfield’s $25bn threshold
When it comes to PE mega-funds, how big is too big? For Brookfield Asset Management, $25 billion is the point at which the firm would consider dividing such vehicles into separate buckets, chief executive Bruce Flatt told analysts on a Q2 earnings call Thursday.

“I think our private funds can be much larger,” he said. “Our goal is to get… to $25 billion… They won’t get that much bigger than that – they may split and we’ll do ones in Asia or Europe, but that sort of a size where institutions are comfortable.”

An intriguing prospect, though it’s not immediately clear how such a move would work in practice given that LPs may have different motivations for committing to regional or global vehicles. Here’s what else you might have missed:

  • The firm raised $24 billion of fresh capital in the quarter, up from $7 billion in Q1, including $7 billion for its Global Transition Fund.
  • Its most recent PE flagship, the 2018-vintage $9 billion Brookfield Capital Partners V, has passed its commitment threshold, meaning the firm will soon begin raising Fund VI.
  • Brookfield expects to have a final close on its $15 billion flagship opportunistic credit vehicle in the coming months, and to launch its next flagship infrastructure fund early next year.

Mubadala’s GP transformation
Mubadala Capital, the asset management arm of the Abu Dhabi sovereign wealth fund, has swollen its third-party coffers with another secondaries transaction. A consortium led by BlackRock invested in a portfolio of assets managed by Mubadala Capital and led a $400 million stapled commitment to its third fund, affiliate title Secondaries Investor reports (registration or subscription required). Mubadala Capital is understood to be the first sovereign to manage third-party capital on behalf of other institutions. It ran a similar deal to launch the strategy in 2017, with Ardian shelling out $2.5 billion in what was then the largest stapled transaction of all time.

Sun shines on Weatherford
Weatherford Capital, a Tampa-based growth equity firm launched by three brothers, has reached a final close on its debut fund, PEI understands. Weatherford Capital Fund I closed above its $300 million target on $355 million after nine months on the road. The firm, which invests in tech and tech-enabled companies, was founded in 2015 by Will Weatherford, a former speaker of the Florida House of Representatives; Sam Weatherford, a former China-based director at Cerberus Capital Management; and Drew Weatherford, a former quarterback for Florida State University.

Essentials

No says yes to Lazard
Lazard has appointed Patrick No as managing director in Singapore to cover primary fundraising and secondaries transactions, per Secondaries Investor. No was previously Asia head of financial sponsors at Credit Suisse in Hong Kong. He joins the investment bank at a key time for Asian secondaries, with buyers increasingly active in the region amid a surge of secondaries opportunities, though risks abound. His arrival also marks the latest in a series of Asian placement agent moves during the pandemic, with many jumping in-house or to other shops.

Polaris staffs up
Nordic PE firm Polaris has formed an internal IR unit, per a statement this morning. It has appointed Amanda Platek, formerly of Capstone and Barclays, to lead these efforts. The firm is seeking DKr1 billion ($158 million; €134 million) for its debut lending and minority equity fund, and an undisclosed sum for its fifth flagship buyout vehicle, according to PEI data.

Kedaara’s close
Indian mid-market firm Kedaara has closed its third fund on $1.1 billion, according to the AVCJ (paywall). The firm, which is part owned by US giant Clayton, Dubilier & Rice, had initially sought $1 billion for the vehicle. It is one of the largest raised by a domestic manager to date. Indian GPs were given a fundraising boost this year in the form of regulatory changes bolstering pension and insurer participation in alternatives by up to $28 billion.

Dig deeper

LP meetings. It’s Monday, so here are some LP meetings to watch out for this week.

16 August

17 August

18 August

19 August

20 August

Today’s letter was prepared by Alex Lynn with Michael Baruch.

– This report was updated to correctly list Weatherford Capital’s headquarters as Tampa.