Side Letter: Secondaries market surprises, Natixis’s returns, mega funds update

3i, Coller Capital and Bowmark execs ran around a park last week to raise money for charity. Who was the fastest? Find out below in today's brief, for our valued subscribers only.

Just happened

Second to none

The market for trading second-hand fund stakes could be set for another record year. According to figures from intermediary NYPPEX Private Markets, secondaries deal volume in the first half of 2019 rose almost 40 percent to $36.1 billion, with some buyers citing a 50 percent year-on-year growth in activity, sister title Secondaries Investor reports. Market conditions are “manic, to say the least”, one veteran market source with buyside and advisory experience tells PEI. Does manic = reckless? Find out in our upcoming Deep Dive into risk in the secondaries market in September.

Natixis flexes its muscles

Speaking of secondaries, Natixis-owned Flexstone Partners has closed its first secondaries and co-investment fund since the French banking giant merged its three regional funds of funds in December to form the group. The €300 million vehicle is already almost 40 percent deployed. The firm’s predecessor, a €130 million vehicle, has delivered a net multiple of 1.9x and a 25 percent IRR – not bad for a strategy that typically targets 1.5x and mid-teen IRRs.

Old apartment building in VietnamGood Morning, Vietnam PE!

Vietnamese private equity is having its moment. PE firms completed 38 deals in the country last year, a more than 40 percent increase from 2017 and a peak for this decade, according to business information publisher Bureau Van Dijk. Spending more than tripled to $1.6 billion. Contributing factors include a government push to privatise state-owned businesses and improved corporate governance. Entering a frontier market such as Vietnam can be daunting, so PEI compiled this handy beginner’s guide to the country’s key players, hottest sectors and expected returns.

Essentials

Mega funds update. The top 10 largest funds in market as of July are collectively targeting 40 percent more than the those at the same point last year, PEI data show. The biggest of them all is Blackstone‘s Capital Partners VIII, which has so far raised $22 billion and could unseat the $24.7 billion Apollo Investment Fund IX as the industry’s largest-ever vehicle. Also on the fundraising trail are Ardian and Vista Equity Partners, who are seeking a mere $34 billion between them, including co-investment capital.

On your marks. Finance professionals gathered in London’s Battersea Park for the annual JPMorgan Corporate Challenge run last week. Fastest PE-professionals include 3i’s group treasurer Ian Cooper at 114th; Coller Capital partner and co-head of origination Francois Aguerre at 180th; and Tom Elliott, an investment director for London’s Bowmark Capital, at 210th. As PE firms around the world compete for more than $137 billion in fundraisings, we’re glad to see some individuals taking time out to race each other for charity. Curious who else has pace? Check out the full results here.

Inside tip

We’re finalising H1 2019’s fundraising figures and the big story appears to be growth funds, which was the only strategy to attract more capital in final closes year-on-year. Look out for our fundraising figures next week.

Dig deeper

Iowa commits to Siguler Guff. Municipal Fire & Police Retirement System of Iowa has agreed to commit $115 million to Siguler Guff Small Buyout Opportunities Fund IV and $25 million to Top Tier Venture Velocity Fund III. Here’s a breakdown of the $2.5 billion US pension’s investment portfolio. For more information on MFPRSI, as well as more than 6,700 other institutions, check out the PEI database.

Municipal Fire & Police Retirement System of IowaHe said it

“The last thing you want to do if you feel like you’re doing something special and differentiated is wake up a sleeping giant to say, ‘Oh, that’s interesting, maybe I’ll take that too’.”

Shailesh Rao, head of TPG Growth and The Rise Fund for India and South-East Asia, tells a conference in Hong Kong on Thursday that disrupting an industry can go awry if the company reveals too much too early.


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Today’s letter was prepared by Adam LeIsobel MarkhamRod JamesCarmela Mendoza and Alex Lynn.


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