VCFA to raise new secondary fund

The Venture Capital Fund of America, an investor in secondary venture capital and buyout transactions since 1983, is looking to raise $250m for a new fund.

The Venture Capital Fund of America (VCFA) is planning to raise $250m to invest in limited partner positions in US buyout funds.


VCFA has a long history of making secondary investments in US venture capital funds. Set up in 1983, the group was among the first to offer limited partners a way out of their private equity holdings ahead of schedule. The firm says it has completed over 100 transactions involving limited partners such as banks, pension funds, insurance companies, corporates, private equity managers as well as individuals in the US, Europe and Asia.


The bulk of VCFA’s business has been to take on positions in venture capital funds as opposed to buyout partnerships. According to the Daily Deal, the New York firm is now keen to pay more attention to the buyout market, which it believes is subject to less volatility in performance than the venture end of the market.


VCFA still has over a $100m of capital to invest from funds raised in 1999 and 2000. Investors in the group include Hannover Reinsurance in Germany, Liberty Mutual Group and McDermott International Investments.


Private equity secondaries have become increasingly active recently as limited partners are concerned about the performance of their venture capital and private equity assets in the current market environment, or choose to take a more proactive approach to managing their exposure to the asset class.


Early liquidity at a typically very significant discount now seems an attractive option to many, a trend which secondary buyers have lined up to exploit. Offerings currently in the market to raise capital include Coller Capital, Greenpark Capital and Lexington Partners.


The market for secondary private equity transactions, which was worth $3bn in 2000, is expected to grow significantly over the coming years.