Ardian raises $3.2bn for sixth co-investment fund

July 2, 2024 (Preqin News) – Paris-headquartered global alternative assets manager Ardian has raised $3.2bn for Co-Investment Fund VI, a 23% increase on its predecessor co-investment fund, which closed in 2019.

Ardian’s sixth co-investment platform is already 40% invested in 18 transactions, including fire and life safety equipment manufacturer Potter Global Technologies alongside KKR, and eye laser systems provider Schwind with Adagia Partners.

‘If we're successful with the fund, we will deliver private equity-level returns to our investors, both in terms of multiple and IRR,’ Patrick Kocsi, Co-Head of Co-Investment at Ardian in New York, told Preqin News. ‘And we will aim to deliver those returns with greater diversification than there is in a typical buyout fund – 40–50 names as opposed to 10–12 in a fund, diversified by geography, industry, and deal size. And the economics are more favorable, with lower fees and deal costs. If we deliver the same gross return, the net returns will be better.’

The fund attracted 188 investors globally, including pension funds, high-net-worth individuals, insurance companies, and sovereign wealth funds across Europe, the Americas, the Middle East, and Asia. ‘We had a pretty broad spectrum of investors come into the fund,’ said Kocsi. ‘But one of the hallmarks of the fund is that 25% of the capital comes from high-net-worth individuals, which is a very high proportion.’

Co-investments have risen in popularity as a way of accessing private equity over the past couple of years, according to Preqin’s Investor Outlook: H1 2024. Of the LPs surveyed in November 2023, 50% planned to target co-investments over the next 12 months, a fall from 65% a year earlier but a big jump from 13% in November 2021.

Within the co-investment universe, multi-manager funds (funds that seek to co-invest in the deals of more than one fund vehicle) are a niche strategy, but one that is slowly gaining momentum. Aggregate capital raised topped $10bn for the first time in 2019, rising to $12.2bn in 2021 and $12.8bn in 2022, before falling back to $5.2bn last year, with between eight and 14 funds closing each year.

However, there is an increasing pool of managers that have closed $1bn-plus funds in recent years, including HarbourVest Partners ($4.2bn, 2022), AlpInvest Partners ($3.5bn, 2021), Lexington Partners ($3.2bn, 2021), Pantheon ($2.4bn, 2023), Neuberger Berman ($2.1bn, 2021), LGT Capital Partners ($2.0bn, 2022), Hamilton Lane ($1.7bn, 2019), BlackRock ($1.6bn, 2020), Adams Street Partners ($1.3bn, 2022), Stepstone ($1.3bn, 2022), Morgan Stanley ($1.2bn, 2023), and Constitution Capital Partners ($1.1bn, 2020) – as well as Ardian.

Preqin is currently tracking 37 open co-investment multi-manager funds, with GPs in market including HarbourVest, Adams Street, Blackstone, BlackRock, Schroders Capital, Capital Dynamics, Lexington, and Fisher Lynch Capital.

‘Co-investment is a well-established sub-category of private equity and has ample room to grow. We've also been able to attract more investors to our Ardian Customized Solutions – what a lot of the industry calls mandates – that want co-investment exposure alongside the sixth fund. We have over $600mn in customized solutions for this generation, which is a big jump over the fifth.’

_{The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin providing the information in this content accepts no liability for any decisions taken in relation to the above.}