Wednesday

July 13, 2016

www.bloombergbriefs.com

 

DPE Said to Plan Biggest Growth Fund YetBY AINSLIE CHANDLER, BLOOMBERG BRIEFS

Deutsche Private Equity GmbH is trying to gather its biggest private equity growth fund yet, according to two people with knowledge of the fundraising.

DPE has put a 475 million euro ($526.59 million) target on the new fund, one of the people said, while the other said it could be as high as 500 million euros. If 500 million euros are secured, the fund will be 43 percent bigger than its predecessor DPE II, which closed in 2013 with 350 million euros, according to data compiled by Bloomberg.

The firm is seeking capital in what is expected to be a stronger fundraising year for the German private equity market after a slower 2015. German private equity firms raised 1.33 billion euros last year, down from 2.78 billion euros in 2014, according to the German Private Equity and Venture Capital Association, BVK. The group expects strong fundraising in 2016, with 28 German firms in the market or planning to raise funds this year, according to a March 2 statement. Those firms plan to raise a combined 3.1 billion euros.

Investors in DPE's prior fund include several vehicles managed by German fund of funds manager , according to data compiled by Bloomberg. Performance RWB Groupdata for that fund was not available.

Munich, Germany-based DPE in February sold its stake in shipping-industry software company to Finland-based , Interschalt Maritime Systems AG Cargotec Corp.according to a statement. Terms on the deal were not disclosed.

DPE was founded in 2007 as an independent German investment company to deploy capital in Germany, Austria and Switzerland and has about 600 million euros under management, according to its website DPE founder and managing partner Volker .Hichert declined to comment on the fundraising.

Fundraising was strong in the first half of 2016, with 89 percent of all private funds that closed in the period meeting or exceeding their target sizes, according to data compiled by Bloomberg. That's up from 84 percent in the first half of 2015. A total of 1,127 funds were raised during the half, gathering $295.5 billion in commitments.

— April Kim, Bloomberg Data Analyst

"There was no real investment opportunity. It was just a way for me to get money to feed a gambling addiction that was all-consuming at the time."

— Former Park Hill Group Partner Andrew

Caspersen, who pleaded to wire and guilty

securities fraud

$14B — amount by raised for Brookfield Asset Management

its latest infrastructure fund.

57% — proportion of real estate investors planning to cut to exposureU.K. real estate in the next 12 months, following the British vote to leave the EU, according to a survey.

Kern County Employees' Retirement Association's board is due to consider boosting its real estate and setting a first allocationtarget allocation to private credit at a July 13 meeting.

FUNDRAISING. Hidden Harbor is said to be to raise a debut preparingfund.

REAL ESTATE. The Brexit vote should create real estate debt investment , according opportunitiesto Managing Partner DRC Capital

.Dale Lattanzio

GPs are getting Q&A. aggressivewith fundraising timelines, according to 's Commonfund Capital Miriam

.Schmitter

QUOTED

THE WEEK IN NUMBERS

MEETING TO WATCH

IN THIS ISSUE

FROM THE MINUTES  COMPILED BY AINSLIE CHANDLER, BLOOMBERG BRIEFS

More Managers Met, Beat Fundraising Targets in First Half

July 13, 2016 Bloomberg Brief Private Equity 2

FROM THE MINUTES  COMPILED BY AINSLIE CHANDLER, BLOOMBERG BRIEFS

Kern County Considers Credit; Calstrs Channels Bachman-Turner OverdriveKern County Employees' Retirement

Association's board is due to consider boosting its real estate allocation and setting its first target allocation to private credit at a July 13 meeting, according to the meeting agenda. Consultants Verus have suggested the pension reduce its allocation to domestic and international equities and to commodities, while allocating 5 percent to private credit and boosting real estate to 10 percent from 5

Under the Verus percent. recommendation, the pension's private equity allocation would stay at 5 percent.>Click for the agenda. here

California State Teachers' Retirement System plans to maintain its long-term investment private equity pacing goals despite high valuations and high levels of dry powder in the sector, according to its Investments Branch Business Plans report. The report, due to be discussed at its July 14 investment committee meeting, is themed "Takin' Care of Business," a reference to Bachman-Turner Overdrive's hit song. "Past experience has proven many times over that attempting to time private equity markets to any large degree is difficult and probably unwise," according to the report. "Past experience also dictates that it is also unwise to be fully swept away by the momentum of rising valuations, shortened fund raising cycles and rapidly increasing fund sizes." Calstrs' private equity portfolio was worth $17.6 billion at March 31, the report said.>Click for the report.here

New York State Common Retirement Fund has committed $500 million to New-York focused co-investment funds managed by Hamilton Lane, according to a statement from state comptroller Thomas DiNapoli. The pension system committed $200 million to New York Credit Co-Investment Fund II, a credit fund which will invest in lower middle market New York S tate-based

businesses, according to the statement. It committed $300 million to Hudson River Co-Investment Fund III LP, which will invest in small and middle-market companies. The pension also committed

$125 million to CVC Growth Fund I LP, $31 million to CVC Growth Co-Investment Fund LP, $400 million to Vista Foundation Fund II LP, $250 million to Oak Hill Advisors Strategic Credit Fund II and $300 million to Brookfield Infrastructure Fund II LP, according to the statement.>Click for the full statement.here

Pontiac General Employees' Retirement System is planning to commit between $20 million and $45 million to open and/ or closed-end real estate funds, according to a Request For Proposal on Dahab Associates' website. The Michigan pension, which has about $458 million in total assets, will consider domestic and international-focused core, core-plus and value-add managers, according to the RFP. >Click for the RFP.here

Los Angeles City Employees' Retirement System's emerging managers program committed to seven private equity managers and one real estate manager in the three years to Dec. 31, 2015, according to a staff report to its July 12 board meeting. In 2015, the pension committed $10 million apiece to 1315 Capital LP, Angeles Equity Partners LP, CenterGate Capital Partners I LP and New Water Capital Partners LP. It committed $20 million to real estate fund Gerrity Retail Fund 2 LP. The pension's real estate committee is expected to hear reports on real estate debt investors Cornerstone Real Estate Advisers and Quadrant Real Estate Advisors LLC at its July 13 meeting.

>Click for the staff report. here>Click for the July 13 agenda. here  

Meketa Investment Group is now Orange County Employees Retirement

's general investment consultant, Systemtaking over from NEPC on July 1, according to a report from the pension's Chief Investment Officer Girard Miller.

>Click for the report.here

Municipal Fire & Police Retirement's board of trustees was System of Iowa

expected to consider an unspecified

private equity investment at its July 7 meeting. The board was also due to have education on the topic of infrastructure.>Click for the agenda. here

Stanislaus County Employees'plans to start a Retirement Association

search for private credit, value-add real estate and private equity managers in early 2017, according to a report from consultants Verus for a June 28 meeting. The searches come as the pension rolls out a new six-year asset allocation plan approved in May. Meanwhile, Raven Capital Management has secured $330 million in commitments for Raven Asset-Based Opportunities Fund III LP, according to a separate June 28 report.

>Click for the reports.here 

California Public Employees' 's board of Retirement System

administration and executives are due to discuss fiscal year-end results at a July 18 to 20 offsite meeting, according to the agenda. They will hear a presentation called "2035 Vision: Investing in the Future" from R. Jesse McWaters, who leads the World Economic Forum's work on innovation in financial services.

>Click for the agenda. here

Milwaukee Employes' Retirement System's investment committee is scheduled to hear a presentation from Cornerstone Investment Partners at its July 14 meeting, according to the agenda.>Click for the agenda. here

Louisiana School Employees' Retirement System's board of trustees is due to hear presentations from Orleans Capital Management and Kleinwort Benson Investors at its July 18 meeting.

>Click for the agenda.here

Municipal Fire and Police Retirement System of Iowa's board of trustees committed $30 million to Adams Street US Small Market Buyout Fund and $30 million to Siguler Guff Hawkeye Opportunities Fund at its July 7 meeting, according to a flash report.>Click for the report. here

REAL ESTATE

July 13, 2016 Bloomberg Brief Private Equity 3

 

REAL ESTATE

DRC’s Lattanzio Sees Real Estate Debt Opportunities Post-BrexitBY AINSLIE CHANDLER, BLOOMBERG BRIEFS Britain’s decision to leave the European Union should create opportunities for real estate debt investors once the short term uncertainty is resolved, according to DRC Capital managing partner .Dale Lattanzio

London-based DRC is trying to gather its biggest fund yet, putting a 500 million pound target and 750 million pound cap on DRC European Real Estate Debt

. The firm is about to hold a Fund IIIsecond close on the fund, Lattanzio said.

The Brexit vote came mid-fundraising for DRC, which means the firm is in the "nice position" of having a fresh pool of capital to invest across Europe in the post-vote market, he said.

Investment opportunities will come from a "a further retrenchment by the banks and a renewed pull back from commercial property lending," which will mean more financing is required from non-bank lenders, Lattanzio said.

"Even if CRE acquisition volumes decline in the market due to post Brexit uncertainty we would expect to see many requests to facilitate refinancings as a significant portion of the outstanding debt in the European market is due to refinance over the next two years," he said.

DRC will "probably take a wait-and-see approach in terms of the London office market," Lattanzio said, noting the potential drop in occupier demand if employers shift jobs away from the city to the continent. However, he said fundamentals in London are currently solid.

DRC has previously invested in London and has some exposure in its first two funds but the first investment in its new fund is in continental Europe, he said.

Several asset managers suspended redemptions on about dollars $23 billionof open-ended real estate funds as they

 struggled to meet demand after the Brexit vote. Henderson Global

Investors, M&G Investments, Aviva and Investors Standard Life

stopped withdrawals in Investmentstheir funds.  

“Investor redemptions in the fund have risen markedly because of the high levels of uncertainty in the U.K. commercial property market since the outcome of the European Union referendum,” M&G saidon its website on July 5 about the temporary suspension of trading.

Central London office prices could drop as much as 20 percent after Britain leaves the EU as companies consider moving to Europe or delay expansion plans in the U.K., according to Green Street Advisors LLC. And as many as 100,000 financial-services jobs could be lost in the U.K. by 2020 because of Brexit, according to an

estimate by PricewaterhouseCoopers LLP.

DRC has no equity exposure to real estate and its average loan-to-value ratio is around 70 percent, so the firm can weather a drop in values of as much as 30 percent before losses are incurred, Lattanzio said.

The firm, which spun out of Duet Group in 2012, formed to take advantage of a gap left by banks withdrawing from commercial property lending amid tighter regulation. The new fund will originate loans secured by core European properties.

"Right now we have a political crisis, not an economic crisis," Lattanzio said. "This could take years. We are all wondering what form it takes. It could throw up some dislocation."

 

FUNDRAISING

Investors Plan to Cut U.K., EU Property Exposure

More than half of the 90 institutional real estate investors that responded to a sentiment survey by data provider Preqin in the wake of the British vote to exit the EU plan to cut their exposure to the U.K. real estate sector in the next year.

July 13, 2016 Bloomberg Brief Private Equity 4

FUNDRAISING

Private equity firm is preparing to raise its first Hidden Harbor Capital Partnersbuyout fund, just two months after the firm was established, according to two people with knowledge of the fundraising.    Co-founder and managing partner who declined to comment on theJohn Caple,fundraising, said the firm is currently focused on finding deals and has received backing from high net worth investors.    Boca Raton, Florida-based Hidden Harbor plans to make equity investments of $10 million to $50 million, mostly in family owned businesses. It is focused on the transportation and logistics, retail and consumer, industrial and business services sectors.    "Increasingly, investors are starting to understand that there is real money to be made in the lower-middle market and so many of the existing quality firms have gotten bigger, so it's hard to find good quality managers that are still raising smaller funds and looking at sub-$10 million Ebitda businesses," Caple said in a phone interview.    Sixty-one percent of limited partners surveyed by data provider in December Preqinsaid they considered small to mid-market buyout funds as the best investment opportunity in the market and 73 percent of investors surveyed said they plan to invest in those funds this year.    "A lot of the larger institutions are looking for ways to get back into that lower middle market," he said.     Limited partners remain split on their views of first-time funds, according to Kelly DePonte, a managing director and head of research at placement agents Probitas Partners. Some prohibit it in their investment policies. Others welcome first-time managers with emerging-managers programs and others to invest opportunistically.     First-time fund managers tend to be "hungry" as they need strong performance in order to raise their second and third funds, DePonte said.    Top quartile returns in first-time funds have been shown to outperform those of more established managers, DePonte said. However, the gap between top and bottom quartile returns is far greater in first-time managers, so there is more risk. Hidden Harbor started in May, with Caple and as managing partners. David Block

— Ainslie Chandler, Bloomberg Briefs  

PWP Growth Equity, the private equity arm of boutique investment bank Perella , is in the early stages of raising its second fund, a person with Weinberg Partners

knowledge of the matter said.The firm has held preliminary talks with existing backers about starting to raise money

for its second pool as soon as the end of this year, said the person, who asked not to be identified because the information is private. PWP Growth Equity is targeting $600 million for the new fund, the person said, the same size as its predecessor, which closed in 2014.

The private equity division is a bright spot in Perella Weinberg’s asset management unit, which last year agreed to wind down a $1.7 billion asset-based value strategy fund. It has since sought to expand and has added talent from and Goldman Sachs Harvard

in the past year.Management Company Perella Weinberg’s first fund, which exceeded its initial fundraising target by $200

million, invests in lower middle-market companies across consumer, services and industrial sectors. Its current portfolio includes stakes in Black Bear Diner, MSA Security and MOD Pizza, a “fast casual” dining company, according to data compiled by Bloomberg.

A spokeswoman for Perella Weinberg declined to comment.— Sonali Basak and Kiel Porter, Bloomberg News

Hidden Harbor Planning to Raise First Fund 

Perella Weinberg Unit Said to Plan Second Fund

BRIEFLY NOTED

Blumberg Capital is expected to close a venture fund of about $200 million by the end of the month, a person familiar with the matter said.

The venture capital firm typically invests in young cybersecurity and financial-services companies. However, two of its highest-profile bets diverged from those fields: Hootsuite Media Inc., a Canadian startup that makes social-media software, and Nutanix Inc., a maker of software and hardware for data centers.

Nutanix filed for an initial public offering last year but delayed its plans amid volatile public markets.

, director of operations at Gloria HuiBlumberg Capital, didn’t immediately respond to a request for comment on the firm’s fundraising plans.

In the first half of 2016, venture funds raised $22.5 billion, according to the National Venture Capital Association, a trade group. While that puts the industry on track for its biggest year in a decade, it falls short of the record $102 billion raised in 2000.    

— Sarah McBride, Bloomberg News

Blumberg Said to Close $200M Fund This Month

FEATURE

July 13, 2016 Bloomberg Brief Private Equity 5

FEATURE

Brookfield Raises $14 Billion for Largest Infrastructure Fund, Plans Bigger Deals    BY SCOTT DEVEAU, BLOOMBERG NEWS

Brookfield Asset Management Inc. raised $14 billion for its latest infrastructure fund, topping its target, as Canada’s largest alternative asset manager goes on the prowl for larger acquisitions.

The pool, known as Brookfield Infrastructure Fund III, will be the largest private infrastructure fund ever raised in the industry, according to an interview with Brookfield, and data compiled by Bloomberg. Its original target was $10 billion.

It took the Toronto-based firm nine months to raise the money, according to

, the head of Brookfield Sam PollockInfrastructure Partners, the company’s publicly traded infrastructure arm. That’s just one month longer than it took its predecessor, which closed in 2013, to amass $7 billion, despite the new fund being twice as big.

Including the latest fund, Brookfield has raised $27 billion in the past 18 months for its property, renewable energy and private equity subsidiaries, underscoring surging demand for investments outside volatile equity markets and bonds, where yields have sunk to record lows.

“I realize that it probably seems large to the outside world,” Pollock said in a phone interview. “But given the amount of deal flow that we’ve seen and the fact that the transactions are larger, it’s actually the perfect size for us.”

The firm committed $4 billion of its own money to Brookfield Infrastructure Fund III, according to the statement.

Brookfield’s fund may not be the largest for long. Global Infrastructure

is seeking as much as $15 Partners LPbillion for its third flagship fund, people familiar with the matter said in November.

Brookfield Infrastructure Fund III attracted about 80 new institutional investors, in particular from Asia in China, Japan and South Korea, Pollock said.

“We would have had one or two really large investors in fund one or fund two,” he said. “Now, both the number and the scale of capital coming from Asia is much

The 10 Biggest Private Real Assets Funds 

FUND GENERAL PARTNER VINTAGE SIZE ($B)

Brookfield Infrastructure Fund III LP Brookfield Asset Management Inc. 2016 14

Global Infrastructure Partners III LP Global Infrastructure Partners 2016 10.8*

Global Infrastructure Partners II LP Global Infrastructure Partners 2011 8.3

Global Strategic Investment Alliance Borealis Infrastructure Management Inc 2012 7.5

Brookfield Infrastructure Fund II LP Brookfield Asset Management Inc. 2013 7

EnCap Energy Capital Fund X LP EnCap Investments LP 2015 6.5

GS Infrastructure Partners I LP GS Infrastructure Partners 2006 6.5

Global Infrastructure Partners LP Global Infrastructure Partners 2006 5.6

ArcLight Energy Partners Fund VI LP ArcLight Capital Partners LLC 2014 5.6

Macquarie European Infrastructure Fund 2 LP Macquarie Group Ltd 2006 5.5Source: Bloomberg LP                                   * Still fundraising 

more significant. It’s probably almost a quarter of our fund.”

Pension plans are also allocating more money to infrastructure, he said. Brookfield is targeting an internal rate of return of more than 13 percent from its investments, Pollock said.

“These assets are basically the backbone of the economy, he said. “One day, it wouldn’t surprise me if the infrastructure sector as a whole was bigger than the real-estate sector.”

The larger fund size will give Brookfield, which has $240 billion in assets under management, the capital it needs to chase big acquisitions, Pollock said.

Brookfield and its partners agreed in March to acquire Australian rail and port company Asciano Ltd. for A$9 billion ($6.8 billion). The firm is also leading a group of investors in exclusive talks to acquire an 81 percent stake in a natural gas pipeline network being sold by Brazil’s troubled state-run oil company, Petrobras, which is expected to fetch nearly $6 billion.

A typical transaction in the previous fund would be less than $1 billion, Pollock said. The new fund will invest in a handful of deals valued at more than $1 billion apiece, he said. It has already committed more than $3 billion, according to the statement, including to a portfolio of U.S.

hydroelectric facilities and a Colombian power generation company.

A push to privatize infrastructure assets in regions such as South America and Australia has helped create bigger targets, Pollock said. He’s hopeful that the Canadian government will adopt a similar policy, as Ottawa rethinks how it can court private firms to encourage invest in the country’s infrastructure.

“Governments realize they don’t have the capital to invest in their infrastructure,” Pollock said. “They need new sources of capital and I think it has been widely recognized that the private sector not only has the capital to fund it, but also to improve the asset,” he said.

Brookfield is seeing big opportunities in Brazil, where the political and economic situation is putting some “once-in-a-lifetime” assets on the block, Pollock said. North American midstream oil and gas assets, including pipelines, processing plants, and other assets, are also on the firm’s radar, having dropped in valuation due to the oil price rout.

“It’s a large market and up until 12 months ago, we just couldn’t find value there,” Pollock said. “With the change in oil prices and just the reevaluation of the cash flows in the business, it became re-rated and values have come down dramatically,” Pollock said. “That will be a place where we’re going to invest a great deal of capital."

July 13, 2016 Bloomberg Brief Private Equity 6

    

 

IN THE NEWS

July 13, 2016 Bloomberg Brief Private Equity 7

IN THE NEWS

Uber Technologies Inc., Snapchat Inc. and other unicorns snagged the most funding from venture capitalists in the first half of 2016 as the industry sets pace for another record year. In total, venture investors plowed $40 billion into U.S. startups during the first half of this year, according to a report Thursday from PitchBook Data Inc., an amount on track to match the $79 billion invested in 2015.

While plenty of money is up for grabs, most of it is going to large, late-stage companies including unicorns, private companies valued at $1 billion or more. Uber’s $5.6 billion Series G round, for example, accounted for 28 percent of all venture capital deployed during the second quarter, according to PitchBook. Finance rounds that were $25 million or more have accounted for more than 66 percent of all venture capital invested so far this year.

Click for full story.here — Lizette Chapman, Bloomberg News

Chinese venture capital firm IDG Capital Partners and Silicon Valley investor Breyer Capital raised a $1 billion fund to back startups in China, showing there’s still appetite for significant investment in the country even as overall funding has slowed.

The new IDG Capital Fund III will invest in technology, media, health care, energy and consumer-product startups in China, as well as companies based elsewhere that are looking to enter the country.

The fundraising by IDG and Breyer Capital extends a partnership between the two firms that began more than a decade ago, Jim Breyer, co-founder and chief executive officer of the eponymous firm, said in a statement Tuesday. Click for full story here

— Melissa Mittelman and Lizette Chapman, Bloomberg News

Banks got their final 12-month reprieve from a Volcker Rule restriction on holding investments in private-equity firms and hedge funds. The industry has until July 21 of next year to shed stakes in private funds, the Federal Reserve said in a statement Thursday.

The extension had already been announced in 2014, but bankers had been waiting for the agency to confirm it before the previous extension was set to expire later this month. The Fed said it will also “provide more information in the near term” about whether it will take further action on banks’ most illiquid investments in private funds. Dodd-Frank provided banks a chance to win 5-year delays for funds that would be the most difficult to sell.

— Jesse Hamilton, Bloomberg News

Andrew Caspersen admitted to scamming friends, family and a charitable foundation out of millions of dollars, telling a judge it was all due to a gambling habit that spiraled out of control.

Caspersen’s victims, including the foundation of billionaire Louis Bacon, lost $38.5 million, according to prosecutors. Paul J. Taubman’s fired PJT Partners Inc.Caspersen, 39, after disclosing the fraud to the government. Caspersen pleaded guilty Wednesday to securities fraud and wire fraud. He told U.S. District Judge Jed Rakoff that he tricked people into giving him money for investments he claimed would return 15 to 20 percent interest. Click for full story. here

— Bob Van Voris, Sonali Basak and Patricia Hurtado, Bloomberg News

Unicorns Snag Most Venture Capital in 1H of 2016

China's IDG, Breyer Capital Raise $1 Billion

Fed Grants Final Delay for Volcker Ban on Funds    

Caspersen of PJT's Park Hill Group Pleads Guilty

IN BRIEF  

H.I.G. Bayside is working with Italy's banks to help restructure the country's distressed corporate debt.

The international investment firm, together with Milan-based private equity Idea Capital Funds, have set up a new vehicle that will take the lenders’ non-performing loans and invest new money to help turn around the businesses. The banks will own units of the 260 million-euro ($288 million) Idea CCR fund and participate in any recovery of the underlying credits, said Giuseppe Mirante, a managing director at H.I.G. Bayside in London. Click here for full story.

— Luca Casiraghi, Bloomberg News

 Bain Capital Ventures closed a $600 million fund to back technology startups, showing investors continue to pour money into the industry despite anemic exits and hand-wringing over bloated valuations. Bain’s fund, which was disclosed Friday in a filing with the Securities and Exchange Commission, comes as investors have buoyed total venture fundraising to $22.5 billion during the first half of 2016. If that pace continues, this year will easily outstrip the $36 billion raised by funds in 2015 and mark a high not seen in more than a decade. “We’re seeing successful investors essentially re-raise again and again because they can -- they’ve still been successful, especially over the past couple years,” said , a Garrett Blacksenior analyst at industry research firm PitchBook Data. Limited partners “still want that allocation to VCs in their portfolio as a sliver of high-risk, high reward.” Click here for full story.

— Lizette Chapman and Melissa Mittelman,

Bloomberg News

H.I.G Invests in Distressed Italian Debt

Bain Capital Ventures Raises $600 Million

Q&A

July 13, 2016 Bloomberg Brief Private Equity 8

Q&A

GPs Getting Aggressive on Fundraising Timelines: Commonfund's Schmitter

Some general partners are trying to raise and

close their funds in as little as eight weeks,

putting pressure on limited partners to act quickly,

according to , a managing Miriam Schmitter

director at . in London Commonfund Capital Inc .

Schmitter also discusses why increasing fund

sizes are a concern and how the Brexit vote could

affect the market. Commonfund is an asset

manager that services the non-profit sector such

as endowments and foundations. It had $24

billion in assets under management at March 31.

Schmitter spoke to Bloomberg Briefs' Ainslie

Chandler on June 2 and followed up by email

following the Brexit vote. Her comments have

been edited and condensed.  

Q: What’s the biggest trend you have noticed in the current private equity market?A: We are still in a very benign fundraising market, so a lot of GPs want to take advantage of it. We still see a lot of people coming back quite early to fundraise, people that we might have expected later. We as a firm are focused on the lower market, the middle market, primarily. But there are also much bigger firms back in the market. And many GPs have pretty aggressive fundraising timelines, the sought after ones. We've seen timelines of eight weeks from start to finish. So if you have a few [to look at] at the same time, it keeps you busy.

Q: As an LP, does it concern you that GPs are coming back to the market so early?

Of course it's not ideal. But it's the A:eternal push and pull of what one can get away with and what investors are willing to accept in the hope of a great performance going forward.

Q: In terms of your portfolio, is there any one area or sector that you are focused on at the moment?

We do like to have concentrated A:portfolios, many limited partners have realized that if you are over-diversified you eventually get an index. In those concentrated portfolios, we focus on three buckets. We like some managers who are

 

really good at growth investing, then the value-oriented managers who are often very hands on operationally and then, as a third category, managers who are focused on turnarounds. In the venture space, we re-tilted towards early stage. We do have some later-stage managers but the bulk is in early stage and that is a response to the valuation environment that we have had over the past few year years. And we also do natural resources.

Q: Is it a competitive market for limitedpartners trying to get into funds?

It definitely is. We've seen a lot of A:funds turn investors away. We just backed a group that only admitted a handful of new LPs … actually we were in two situations like that. And these were managers who we had been courting before. It is quite competitive, especially for people who cannot move that quickly. Or for people who have to put very large checks to work. Let's say you have a $400 million fund and you have a lot of interest, you wouldn't want to give a $100 million commitment to one party.

Q: Have you seen any change in fees and terms, given the competitive environment? Are the GPs getting more aggressive in that respect?

On the margins. But we haven’t seen A:a wholesale trend towards more aggressive fees or backtracking on the offsetting of transaction fees, which is positive.

Q: What about carried interest? Wehave seen some firms starting to ask

for premium levels of carry. Is that becoming more common?

On the venture capital side, it certainly A:is. Most of the premium funds are charging more. On the buyout side, we don't really see that.  

Q: Is there an aspect of the private equity or venture capital market that

concerns you at the moment? Valuations seem to be quite a big

concern, particularly in the U.S. It is valuations. But there are A:

differences. If you do lower middle market investment in many places in Europe, people are still paying pretty reasonable valuations and a lot of that is being driven by the debt market. If you only get 2 times leverage, you won't be paying 10 times Ebitda for an asset. Some GPs we like may be a bit too aggressive in terms of fundraising, in terms of the amount they are raising. And there’s a lot of uncertainty at the moment, which could have an impact on capital markets and on currencies.

Q: What impact do you think the Brexit vote will have on fundraising and deals? Will it have an effect on your strategy?A: The immediate impact has been from a currency and comparable company valuation perspective. In the mid term, weaker confidence and uncertainty will likely have an effect on exits, but could also create a buying opportunity. It’s too early for us to make any decisions regarding our investment strategy, but we are monitoring the situation closely.  

Based in: London  Hometown: Bayreuth, Germany  Education: PhD in Economics, Master in Business AdministrationCareer: Managing Director and IC member at Commonfund Capital, Managing Director at Cambridge Associates, Investment Manager at Allianz Private Equity Partners and DB Private EquityRecommended book: The Road to Little Dribbling, More Notes from a Small Island, by Bill Bryson  Best recent vacation: A farm in Austria  

AROUND THE WORLD IN SEVEN DAYS  PRIVATE EQUITY DEAL NEWS

July 13, 2016 Bloomberg Brief Private Equity 9

 

AROUND THE WORLD IN SEVEN DAYS  PRIVATE EQUITY DEAL NEWS

Silver Lake and KKR Join on UFC Purchase; HgCapital Said to Look at P&I Sale

OFF THE BALANCE SHEET

July 13, 2016 Bloomberg Brief Private Equity 10

OFF THE BALANCE SHEETHamptonites Dodge Trump Fundraiser, Roadblocks in Quest to RelaxBY AMANDA GORDON, BLOOMBERG NEWS

Alex Navab of was invited to the KKR Donald Trumpfundraiser in Southampton on Saturday, and did not attend.

"I had no interest," he said Saturday night at the Parrish Art Museum’s Midsummer Party, as he and actress Emily Mortimerdined on corn on the cob and gazpacho. Navab, who campaigned for earlier this year, said Jeb Bushhe’s now backing .Hillary Clinton

He wasn’t the only one at this glamorous, farm-fresh cultural event with a Trump-in-the-Hamptons anecdote.

"We were out doing our daily exercise, and on the way back the road was blocked," said ’s of Morgan Stanley Peter Gregoryhis and his wife Jamee’s close encounter with a Trump-related barricade. "Our four-mile walk turned into a six-mile walk." (That's what you get for living near billionaire , the Wilbur Rosspolitical luncheon’s host).

Joseph Cohen, a former chairman of Cowen & Co. said he saw Trump leaving the area — that is, he spotted a helicopter with Trump lettering buzzing over his 18th-century barn. Others seemed triumphant that they live too far east to spot that chopper, such as ’s , of East Citigroup Alan MacDonaldHampton, and the Brooklyn Academy of Music’s former president, Karen Brooks Hopkins, of Montauk.

To see Amanda Gordon's full Scene Last Night columns on the Bloomberg terminal, click .here

 

Recently Launched/Premarketing

FUND STRATEGY REGION CURRENCY TARGET (ORIGINAL CURRENCY)

IK Investment VIII LP Buyout Western Europe EUR 1,600

Partech International Ventures VII Venture Any EUR 350

ABA Hospitality Real Estate Fund LP Real Estate North America USD 300

Square Mile Partners V LP Real Estate North America USD —

Standard Life Investments European Real Estate Club III LP Real Estate Western Europe EUR —

Alchemy Venture Fund Venture Any AUD 200

Akkadian Ventures IV LP Secondary North America USD —

Eclipse Fund II LP Venture North America USD 175

Marlin Heritage Europe LP Buyout Any EUR 200

Accession Mezzanine Capital IV LP Debt Any EUR 250

Sienna Venture Fund Venture Any USD 100

Capricorn Cleantech Fund II Venture Any EUR 150

Flagship Ventures Opportunities Fund I LP Venture North America USD 350

PWP Growth Equity Fund II LP Growth North America USD 600Source: Bloomberg Private EquityCompiled from SEC filings, Bloomberg stories and other press reports. Reports from sources other than Bloomberg have not been verified. All figures in millions.

LAUNCHES

 

CLOSES

Photo: BloombergAlex Navab, Chad Leat and Mary Kathryn Navab

July 13, 2016 Bloomberg Brief Private Equity 11

Recently Closed

FUND STRATEGY REGION CURRENCYTARGET (ORIGINAL

CURRENCY)CLOSED IN

2016 ($)TOTAL RAISED TO

DATE ($)

Falcon Strategic Partners V LP Debt North America USD 1,250 61 781

BioGeneration Capital Fund III CV Venture Western Europe EUR 50 — —

FSN Capital V LP Buyout Western Europe SEK — 679 821

Pearlmark Mezzanine Realty Partners IV LP Debt North America USD 500 21 71

Peninsula Ventures IV LP Venture North America USD 20 5 5

Forerunner Partners II LP Venture North America USD 76 76 76

Forerunner Partners III LP Venture North America USD 122 122 122

Capital Dynamics Global Secondaries IV LP Secondary Any USD 500 564 564

InfraVia European Fund III Real Assets Any EUR 990 447 448

HIG Bayside Loan Opportunity Fund IV Debt Any USD 1,000 1,100 1,100

Leerink Transformation Fund I LP Growth North America USD 250 71 71

Farallon Asia Special Situations III LP Buyout Any USD 1,120 532 1,120

RockBridge Hospitality Fund VII LP Real Estate North America USD 500 140 140

China Media Capital Partners Fund II GrowthAsia Pacific

EmergingUSD 1,000 350 350

Next Estate Income Fund 2 Real Estate Western Europe EUR 800 800 884

Trivest Growth Investment Fund LP Growth North America USD 100 225 225

Moneta Ventures Fund II LP Venture North America USD 40 30 30

GRP Royalty Fund LP Real Assets North America USD — 6 6

Lionbird II LP Venture Any USD 50 26 26

NextGen Growth Partners Fund I LP Buyout North America USD — — —

Bain Capital Venture Fund 2016 LP Venture North America USD 604 604 604

Iberia Credit Fund II Debt Western Europe EUR 300 298 298

Arx CEE IV Buyout Eastern Europe EUR 100 60 60

Madison International Real Estate Liquidity Fund VI LP

Secondary Any USD 950 1,390 1,390

Patron Capital LP V Real Estate Any EUR 1,100 758 1,050

Bencis Buyout Fund V BV Buyout Western Europe EUR 425 471 470

Raine Venture Partners II LP Venture North America USD — 102 102

Audax Mezzanine Fund IV LP Debt North America USD 1,000 1,200 1,200

IDG China Capital Fund III VentureAsia Pacific

EmergingUSD 1,000 1,000 1,000

CenterGate Capital Fund I Growth North America USD 300 157 157

Thomas H Lee VII LP Buyout North America USD 3,000 904 2,404

Brookfield Infrastructure Fund III LP Real Assets Any USD 12,500 14,000 14,000

Chicago Pacific Founders Fund I Buyout Any USD 500 246 440

GS Vintage VII LP Secondary Any USD 5,000 2,433 2,433

PA Direct Credit Opportunities Fund II LP Secondary North America USD — 57 162

Crestline Opportunity Fund III LLC Debt North America USD 1,250 720 720Source: Bloomberg Private EquityCompiled from SEC filings, Bloomberg stories and other press reports. Reports from sources other than Bloomberg have not been verified. All figures in millions.

CLOSES

COMMITMENTS

July 13, 2016 Bloomberg Brief Private Equity 12

Recently Disclosed LP Commitments

LIMITED PARTNER FUND REGION STRATEGY CURRENCYCOMMITMENT

(ORIGINAL CURRENCY)

TARGET (ORIGINAL CURRENCY, MILLIONS)

Texas County & District Retirement System

Yuyue Capital Venture FundAsia Pacific

EmergingVenture USD 30 200

International Finance CorpArmstrong South East Asia Clean Energy Fund

Asia Pacific Emerging

Growth USD na 150

Strategic Partners Real Estate Special Opportunities I LP

LaSalle French Fund II LPWestern Europe

Real Estate

EUR na 300

Ardian Secondary Fund VII LP Bridgepoint Europe III LP Any Buyout EUR na 2,500

Texas County & District Retirement System

Arbor Investments IV LPNorth

AmericaBuyout USD 50 750

Houston Police Officers' Pension System

Starwood Global Opportunity Fund XI LP AnyReal Estate

USD na na

San Francisco Employees' Retirement System

Bluescape Energy Recapitalization & Restructuring Fund III LP

North America

Real Assets

USD na na

San Francisco Employees' Retirement System

China Media Capital Partners Fund IIAsia Pacific

EmergingGrowth USD na 1,000

Source: Bloomberg Private EquityCompiled from public disclosures by limited partners. Includes commitments that were scheduled for approval but are not yet approved or whose approval has not been confirmed.All figures in millions.  

 

Bloomberg Brief: Private Equity

COMMITMENTS

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Jennifer Rossa

jrossa@bloomberg.net

Private Equity Brief Editor

Ainslie Chandler

achandler14@bloomberg.net

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LISTED PRIVATE EQUITY

July 13, 2016 Bloomberg Brief Private Equity 13

 

LISTED PRIVATE EQUITYBritish private equity fund manager rallied to trade at a one-year high on July 13, after regaining ground lost during the 3i Group Plcweek following the Brexit vote. 3i lost 9.1 percent in the week following the vote, then gained 8.7 percent and 9.7 percent in the two weeks that followed. 3i is up 23.5 percent year-on-year. The FTSE 100 rose 3.3 percent from July 7 to July 12.

— Ainslie Chandler, Bloomberg Briefs

CALENDAR

Source: Bloomberg. Prices and market caps in local currencies. Updated at 8:15 a.m. NYT on 7/13

July 13, 2016 Bloomberg Brief Private Equity 14

Upcoming Limited Partner Meetings

LIMITED PARTNER DATE NOTES

Connecticut Investment Advisory Council 7/13

Essex County (U.K.) Council Pension Fund 7/13 Pension strategy board; report on local pension pooling

Kern County Employees' Retirement Association 7/13 See From the Minutes

Los Angeles County Employees' Retirement System 7/13 See From the Minutes

Los Angeles Water and Power Employees' Retirement Board 7/13 Regular meeting

State Employees' Retirement System of Illinois 7/13 Board meeting

Lincolnshire County Council Pension Fund 7/14 Pensions meeting

Merced County Employees' Retirement Association 7/14 Board meeting

Milwaukee Employes' Retirement System 7/14 Board and investment committee meetings

New York City Employees' Retirement System 7/14 Regular meeting

Seattle City Employees Retirement System 7/14 Board of administration meeting

Denver Employees Retirement Plan 7/15 Private equity review

Oklahoma Firefighters Pension Board 7/15

Los Angeles Fire and Police Pensions 7/16

California Public Employees' Retirement System 7/18 Board of administration and executive offsite. See From the Minutes

Louisiana School Employees' Retirement System 7/18 Investments

Orange County (Calif.) Employees Retirement System 7/18 Board meeting. See From the Minutes

Ventura County Employees' Retirement Association 7/18

Delaware Office of Pensions 7/19 Investment committee meeting

Idaho Board of Examiners 7/19 Board meeting

Maryland State Retirement and Pension System Board 7/19 Board meeting

Nebraska Investment Council 7/19

Ohio Public Employees Retirement System 7/19 Board meeting

Public Employee Retirement System of Idaho 7/19

Arizona Public Safety Personnel Retirement System 7/20

Boston Retirement Board 7/20

Detroit General Retirement System 7/20 Board meeting

Devon County Council Pension Fund/The 7/20 Pension board meeting

Firemen's Annuity and Benefit Fund of Chicago 7/20 Retirement board meeting

Fort Worth Employees' Retirement Fund 7/20

New York City Employees' Retirement System 7/20 Common investment meeting; manager presentations

Oklahoma Police Pension & Retirement Board 7/20 Board meeting

Stanislaus County Employees' Retirement Association 7/20 See From the Minutes

University of California Board of Regents 7/20 Finance committee and board meeting

West Virginia Consolidated Public Retirement Board 7/20 Board meetingSource: Bloomberg BriefCompiled from limited partners' websites and press releases.

CALENDAR