SL Capital raises $427m for secondaries fund

The oversubscribed fund targets a 17% net internal rate of return

SL Capital raised $427 million for its third institutional secondaries fund, SL Capital Secondary Opportunities Fund III, according to an SEC filing.

The firm, which will continue to target stakes in other secondaries funds and funds-of-funds, surpassed its initial target of $400 million for SOF III.

The fund held its first close in October 2016 at $213 million, having launched that April. Investors in the fund include San Bernardino County Employees’ Retirement Association (SBCERA) at $25 million; Cumbria Local Government Pension Scheme at £25 million; and Surrey County Pension Fund at £20 million.

According to a due diligence report prepared for SBCERA by NEPC Consulting, the fund has a 10% carried interest rate, a 10% hurdle rate and a 0.75% nominal management fee on invested capital.

Expecting a 17% net IRR for its investors, SL Capital will commit $1 million to the fund as a general partner.

The firm’s predecessor vehicle, SOF II, closed on $291 million in May 2015.