Side Letter: Warburg’s $16bn war chest; ByteDance’s PE FoF; HSBC’s $1bn close

Further details have emerged about Warburg's next growth equity mega-fund. Plus: ByteDance (yes, that ByteDance) is launching a private equity fund of funds and HSBC has confirmed its sophomore secondaries fund close. Here's today's brief, for our valued subscribers only.

They said it

“Buyers have become more selective.”

Secondaries demand has increased for younger vintages, blue-chip GPs and resilient sectors, Coller Capital founder Jeremy Coller notes in the firm’s latest annual report. More on affiliate title Secondaries Investor (registration required).

Just happened

Warburg’s war chest
Warburg Pincus is the latest private equity giant hoping to capitalise on rampant investor appetites for growth strategies. The firm hopes to gather $16 billion for its next flagship fund, Reuters reported in September. Recent documents from the Minnesota State Board of Investment shed light on the process. Here’s what you need to know about Warburg Pincus Global Growth XIV:

  • Fund XIV is expected to be 50-60 percent invested in North America, 15-20 percent in Europe and 15-30 percent in Asia.
  • It will aim to back 75-90 companies.
  • The fund will have a six-year investment period and 12-year term, with an optional two years’ extension.
  • Its three most recent predecessors have an average ticket size of approximately $175 million.
  • The 2012-vintage Fund XI had a 1.8x multiple of invested capital and 13.5 percent net internal rate of return as of 30 June; the 2015-vintage Fund XII had 1.9x and 21.7 percent.

PE goes viral
ByteDance, the tech juggernaut behind the likes of social media company TikTok, has launched a PE fund of funds business, according to a LinkedIn job posting for a director-level position. The unit will focus on investing in “long-term value” and building connections with “top-tier” fund managers around the world. The role is based either in the US or Singapore, and would involve working with the APAC investment team on a global mandate, responsible for strategy, investment and management of US portfolio funds. It is unclear whether ByteDance will manage third-party capital or be the sole beneficiary of its fund of funds unit.

Crazily rich Asians
Campden Wealth has this morning teamed up with Asian multi-family office Raffles to publish a report looking at wealthy families in the region. Here are some highlights:

  • Some 30 percent of family offices said they are shifting towards growth investments this year, versus 24 percent in 2020 and just 19 percent in 2019.
  • 80 percent of Asia-Pacific family offices invest in PE, and over 90 percent plan to increase or maintain their investments in 2022.
  • Directs account for 57 percent of Asian family offices’ PE portfolios, with the remainder in funds.
  • Venture capital is the most popular type of direct investment, attracting 59 percent of family offices.
  • Some 54 percent of global family offices plan to increase their Asian investments, and 77 percent of regional family offices intend to increase their activity at home.


HSBC’s secondaries fund
HSBC Asset Management has raised another secondaries fund less than one year after the first. The London-based firm collected $1 billion for Private Equity Opportunities II, slightly less than the $1.34 billion raised for its predecessor in December 2020, per a statement. PE Opps II, which Ardian has backed, comprises of a portfolio of 26 PE funds and $100 million of primary capital for new co-investments. Our colleagues at Secondaries Investor and Buyouts have chronicled HSBC’s secondaries processes here and here (registrations required). HSBC Alternatives has invested over $4.3 billion in secondaries transactions since 2012, including the two Private Equity Opportunities funds.

A steep ascent
America’s largest Catholic healthcare system, Ascension, has spent the last six years building a more than $1 billion PE operation, STAT News reports. The 140-hospital non-profit has been investing alongside TowerBrook Capital Partners since 2015, with notable deals including a $200 million investment into debt collection and billing company, R1 RCM. The process has been controversial: minority shareholders in R1 RCM filed a lawsuit against Ascension and TowerBrook this year alleging that the duo extracted $105 million from the business ahead of schedule.

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