Waterland targets €3.5bn for flagship, seeks to raise minority stakes fund – Updated

Waterland Private Equity Investments is out in market with two funds at a time of fierce competition for investor capital.

The Netherlands-headquartered buy-and-build specialist is targeting €3.5 billion for its latest private equity fund, less than two years after the close of its eighth fund on its €2.5 billion hard-cap, a source with knowledge of the raise told Private Equity International.

Waterland is also seeking to raise a fund that will take minority stakes in businesses sold by its own flagship funds, according to two sources.

Follow-on funds have grown in popularity in recent years, with groups such as TA Associates and Equistone raising vehicles for the strategy. By using a dedicated fund to buy the minority stake, GPs can avoid the duration mismatch which comes from doing so out of a flagship vehicle, PEI reported.

Waterland has also used the secondaries market to maintain exposure to its best assets. Last year, it completed a deal to move portfolio company United Petfood out of its sixth fund and into a continuation fund, affiliate title Buyouts reported. Intermediate Capital Group led the process.

The fundraising market has been significantly squeezed this year as managers come back at a faster clip while LPs have denominator and numerator effects to contend with in their portfolios.

Capital raised by private equity funds in 2022 dropped to $337 billion as of June, from $459 billion in the same period last year, according to preliminary figures from PEI. This includes closed-end funds, co-investments, separately managed accounts and joint venture vehicles.

Europe-focused strategies accounted for just 6 percent of all capital raised in the first half.

The number of funds closed slid nearly 40 percent to 622, from 1,033 last year, as LPs continue to consolidate their allocations to a smaller number of larger funds.

Waterland declined to comment.

Article updated to reflect the correct currency.