17Capital has closed its third secondaries fund on its €500 million hard-cap, according to a statement.
17Capital III launched last year with a €450 million target. It was always expected to exceed the firm’s previous fund, which raised €208 million in 2012. The firm’s debut fund closed on €88 million in 2010 and was anchored by Idinvest Partners and Alpha Associates.
About 95 percent of 17Capital’s investors from previous funds re-upped to the new fund. Most of the limited partners are based in Canada, France and the UK with an increased number from Germany. London-based Fleming Family & Partners is an investor in the fund, Secondaries Investor exclusively reported in December.
17Capital provides preferred equity to limited partners in private equity funds, fund of funds and evergreen funds that are trying to accelerate liquidity or to general partners looking for more capital. An LP would effectively sell a tranche of preferred equity to 17Capital. When the distributions start coming back 17Capital gets its money back and a return while the LP keeps the rest.
“It allows private equity investors to raise additional capital or generate liquidity whilst preserving ownership of their portfolios and future upside,” managing partner Pierre-Antoine de Selancy had previously said. “If an investor truly believes in the quality of its portfolio, [our] investments are an attractive alternative to a secondary sale.”
The structure also provides an alternative for firms that might consider raising debt against their portfolio. “Although it’s more costly than debt financing, it is also much more flexible, [since] an investor isn’t tied to specific terms, covenants or repayment dates,” he said.
The firm invests between €5 million and €300 million in each transaction.
Select deals include the re-financing of an SVG Advisers feeder fund that enabled SVG to repay former lenders and a mezzanine investment of €30 million for portfolio of four investments owned by Altamir Amboise – the Euronext-listed firm that co-invests alongside Apax Partners.
“Deal flow for our highly-differentiated product has reached unprecedented levels and is expected to remain buoyant for years to come,” managing partner Augustin Duhamel said in the statement. “We feel our competitive and flexible source of capital is of great use to many private equity investors.”
17Capital was founded in 2008 and has €800 million of assets under management. It is based in London and is led by de Selancy and Duhamel.