In Focus: Private Equity Funds of Funds in Market – December 2015

by Andrew White

  • 04 Dec 2015
  • PE

Preqin’s Funds in Market module on Private Equity Online currently tracks 152 funds of funds raising capital, with an aggregate target of $32bn. These vehicles are managed by 111 different GPs, with 18% of managers raising two or more funds. The manager with the largest number of funds in market is HarbourVest Partners, with nine vehicles currently seeking investor capital. Two of these funds, HarbourVest Partners X - Venture and HarbourVest Partners X - Buyout, will focus on opportunities in the US, while the remaining seven will invest in Canada, Europe, Asia and Rest of World. In addition to gaining exposure to venture capital and buyout funds, Harbourvest Partners will make mezzanine and debt investments through some of its vehicles. Other firms raising multiple fund of funds vehicles include Portfolio Advisors, Commonfund Capital and TS First Fortune Asset Management.

The largest fund of funds in market is HarbourVest International VII Partnership. The fund is targeting $2bn and focuses on investment opportunities outside the US, allowing its clients to customize their commitments by weighting allocations to specific geographies, fund types and industries. The fund will target buyout, venture capital and mezzanine funds and seek to make primary fund investments, acquire interests on the secondary market and co-invest alongside GPs.

The second largest vehicle currently raising capital is Guochuang Kaiyuan Fund of Funds II, which is targeting $1.6bn and is managed by China Development Bank Capital. The fund focuses on late stage venture capital vehicles that invest in China in a variety of industries, including telecoms, media and technology, consumer services and healthcare.

Of the 111 fund managers currently raising capital for funds of funds, 56% are headquartered in North America, 29% in Europe and the remaining 15% in countries outside of these regions, including China, India and South Africa. North America-based GPs are seeking to raise $17.7bn, which accounts for 55% of the aggregate target for the 152 fund of funds in market, with Europe-based managers seeking $8.6bn (27%) and the remaining managers targeting capital commitments of $5.7bn (18%).

Of the funds of funds currently fundraising, 54% will primarily focus on US opportunities, 23% will look towards Europe as their main region for investment, 16% will target Asia and the remaining 7% will focus on other regions.

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