Swiss Re Private Equity Partners II, a fund of funds managed by Swiss Re Private Equity Advisers, has announced a final closing at €409 million – slightly ahead of a €400 million target.
The fund of funds has a strategy of investing in high quality venture and buyout funds in the US and Western Europe. Having launched in late 2002 and achieved a first closing of €180.6 million in March 2003, the fund has already committed over €130 million to 24 private equity funds.
Harold Weiss, head of private equity fund of funds, said Swiss Re acted as cornerstone investor and committed €200 million to the fund. Other mainly Swiss-based investors included Pension Fund Energy, a pension fund for electricity supply enterprises, and ASGA Pension Fund, a pension fund for small and medium-sized Swiss enterprises. Weiss said there were a small number of international investors, but declined to disclose the percentage of total commitments they represented.
Weiss said the key to attracting support in a tough fundraising climate was to persuade investors that Swiss Re was capable of building a diversified and well-balanced portfolio. “Most investors in Switzerland are highly risk conscious and they had to take comfort that they were building the right kind of programme,” he said. Many Swiss institutions were particularly hard hit by the private equity downturn having over-exposed themselves to the asset class in the late 1990s.
Of the fund’s prospects in an increasingly competitive European fund of funds marketplace, Weiss said: “It could be argued that there is too much money chasing too few deals and we will have to watch the money carefully. But we are not a volume player and will conduct lengthy due diligence before making allocations.”
The fund closing coincides with recent fund of funds closures from Axa Private Equity (€250 million) and Schroder Ventures International Investment Trust (€285 million) as well as the appointment of Chuck Flynn, former head of private equity at Deutsche Bank, to head up a new €750 million fund of funds programme at Bregal Investments.
Swiss Re Private Equity Advisers, which has an investment team based in Zurich and an administrative office in New York, manages commitments of more than €1.7 billion in over 100 private equity funds on behalf of Swiss Re and third parties. It provides a range of private equity products and services including funds of funds and customised managed accounts.