A look at private equity investors in mezzanine funds around the world

by Matthew Robson

  • 18 May 2010
  • PE

San Francisco City & County Employees' Retirement System (SFERS) has committed to three 2010-vintage mezzanine funds. It most recently allocated USD 20 million to ABRY Senior Equity III, a US-focused fund that reached its target of USD 750 million in late April. SFERS’s commitment represents the lower end of its typical bitesize, which ranges from USD 20 million to USD 50 million. The USD 13 billion pension fund uses Portfolio Advisors as its non-discretionary consultant for private equity investments and is currently just under its 14% target allocation to the asset class.

Preqin’s Investor Intelligence database shows 651 active private equity investors that have invested in mezzanine funds or have an interest in mezzanine funds. Just over half of these, or 336, are based in the US, with 43 LPs in New York, 43 in California, and 21 in Illinois. In the rest of the world, countries with the most investors indicating a mezzanine preference include the UK at 38 firms, Germany at 26, France at 25, and Japan at 13. It is perhaps surprising that (excluding funds of funds) many of the largest mezzanine fund investors are based outside the US. For instance, four of the five biggest investors (by US-dollar private equity allocation) with an interest in mezzanine are located in Switzerland, Singapore, Kuwait, and Canada.

The most predominant investors in mezzanine funds are public pension plans (141 LPs), followed by private equity fund of funds managers (109).  Others are fairly evenly distributed between asset managers, banks, endowments, foundations, and insurance companies. 35% of investors that invest in mezzanine funds consider first-time funds (including spin-offs), while 45% of all investors would consider the same.

More information on mezzanine investors and other private equity investors can be found on Preqin's Investor Intelligence  database.

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