17Capital returns with latest preferred equity fund – exclusive

The preferred equity pioneer is understood to be seeking at least 50% more than its predecessor for Fund 5.

17Capital has returned to market with its fifth flagship fund and is seeking 50 percent more than its predecessor vehicle raised, Secondaries Investor has learned.

The London-headquartered preferred equity specialist registered 17Capital Fund 5 in May, according to a regulatory filing in Luxembourg. The fund’s target is €1.8 billion, according to a source familiar with the fundraise.

The firm has also registered a co-investment vehicle for Fund 5.

Predecessor Fund 4 raised €1.2 billion in 2017, beating its €800 million target, according to Secondaries Investor data. 17Capital’s funds have more than doubled with each fundraise.

Preferred equity – a tranche that sits between equity and debt in the capital structure – has attracted increased attention in recent years. According to advisor Evercore, 31 percent of buyers offered a preferred equity option last year.

In a June podcast with Secondaries Investor, 17Capital managing partner and founder Augustin Duhamel said his firm saw close to $10 billion in dealflow last year. GPs are also using preferred equity as an alternative to selling minority equity stakes, and a market correction could be a boon for the strategy, Duhamel said.

A spokeswoman for 17Capital declined to comment on fundraising.

– Alex Lynn contributed to this report.