Side Letter: HVPE infra bet, Advent tech, Vitruvian’s plan

Starbucks as an LP? A coffee and fund commitment? Here’s today's brief, for our valued subscribers only.

Just happened

HVPE’s infra $150m

We are not the only ones going a bit infrastructure heavy* this week. HVPE, the London-listed vehicle that invests in HarbourVest’s products, has seen its largest ever month of drawdowns. It invested $112 million in February, most of which went into the debut deal for HarbourVest’s real assets fund, which is still in fundraising mode. The deal – $150 million invested into a complex secondaries restructuring (details here) – means real assets now account for 15 percent of HVPE’s assets (the top of its allocation range). Interestingly, HVPE seeded the fledgling real assets fund with a $150 million commitment and as such stands to receive a share of the fee revenue. That’s a first for the listed vehicle and mirrors what we are seeing elsewhere in the market as investors try to access some of the GP’s economics.

*Here’s a short video from Infrastructure Investor Editor Bruno Alves on the hot topics at its Global Summit wrapping up today in Berlin.

Send the bill(ion)

Advent International, like a number of its PE peers, has launched a dedicated tech fund with a target of $1 billion, PE Hub reports. The move follows the appointment of Bryan Taylor, former co-head of TPG Capital’s technology group, to lead its tech investment efforts in February. He is also tasked with opening a new office in the Bay Area later this year. The firm declined to comment on the fundraise. Separately it is expected to hold a one-and-done on its latest mega-fund, for which it is targeting between $15 billion and $17.5 billion, in Q2.

‘Brook-Oak’ not the new Black(stone)

Brookfield Asset Management said last week that its plan to acquire a majority stake in Oaktree Capital Management would create an entity with approximately $475 billion of assets under management. The move inevitably prompted comparisons with Blackstone, which with $472 billion dominates private markets.

A closer look at the numbers suggests Brookfield-Oaktree would be less comparable in size than first thought. Brookfield calculates total AUM on a gross asset value basis, meaning some of its $350 billion of AUM is portfolio company debt, according an SEC filing. It does this to give a sense of the scale of the assets it controls. Blackstone’s AUM only includes equity: were it to include portfolio company debt, it would be much more, we are told.


Lower mid-market magic. The whole fund may be a lot smaller that Steve Schwarzman’s pay packet, but investors in London-based Synova Capital’s £110 million ($145 million; €127 million) Fund II must be feeling lucky. It has already returned 3x to investors – and it still has half the fund’s portfolio to realise. This comes off the back of its sale of UK financial products database Defaqto, which generated 3.9x on invested capital and a 46 percent internal rate of return.Mexico rush. Blackstone, KKR and others have all started raising serious capital from Mexican pension funds, reports Reuters. This follows a law change early last year to allow local pensions – known as Afores – to back foreign private equity funds.

Vitruvian thinking of liquidity. The European private equity firm that had a smash hit with the IPO of food delivery company Just Eat in 2014 is mulling a GP-led secondaries process on its debut fund. Investors in the €925 million Vitruvian Investment Partnership may be given the opportunity to roll into a new vehicle or sell their stakes to incoming buyers, sister title Secondaries Investor has heard. The London-based buyout firm is in early stage discussions with Evercore.

Want more data?

There are more than 6,700 institutions in our database, including HarbourVestVitruvianAdventBrookfieldOaktree and Synova Capital from today’s Side Letter.

We did the maths

In lock step. Private equity fundraising plunged last year – which we posit is more down to supply than demand – and PEI data show the trend was widespread across asset classes. The biggest declines were in PE and private debt – two asset classes that can be joined at the hip, given private equity firms’ increasing reliance on alternative lenders. But Q1 numbers are just around the corner and will likely bring some brighter news.

He said it

“We believe that innovative ideas are fuel for the future, and we continue to build on this heritage inside our company across beverage, experiential retail and our digital flywheel.”

Some textbook corporate speak from Kevin Johnson, Starbucks president and chief executive, announcing the company’s first foray into fund investing. The firm is providing a $100 million cornerstone commitment to a new retail and food-focused fund managed by Valor Equity Partners.

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Today’s letter was prepared by Toby MitchenallIsobel MarkhamAdam LeRod James and Alex Lynn.

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