Aberdeen beats target on fourth secondaries fund

Aberdeen Standard Investments has held the final close on its latest dedicated secondaries fund.

The firm, which has £457 billion ($632 billion; €534 billion) of assets under management, said in a statement that it has raised $556 million for Aberdeen Standard Secondary Opportunities Fund IV and related separate accounts, a 30 percent increase on its 2017-vintage predecessor.

More than 50 investors committed to the fund: 60 percent from the UK and 40 percent from North America. Limited partners include San Bernardino County Employees’ Retirement Association (SBCERA), which committed $40 million, according to Secondaries Investor data.

Stewart Hay, global head of private markets client strategies, said in the statement: “We worked closely with our investors in the initial stages of product development to create a strategy, target fund size and fee structure to meet their needs. This has been developed in recent years with the addition of dedicated secondaries separate accounts and other separate accounts which include secondaries as part of their overall strategy.”

Aberdeen returned to market in 2018 targeting $500 million for the fund, US pension documents show. Similar to predecessor SOF III, it invests in niche areas including stakes in funds of funds and secondaries vehicles.

SOF IV has an allocation of 40-60 percent to buyouts, 20-40 percent to venture capital and an opportunistic pocket that has previously included credit, natural resources and growth funds, according to the 2018 pension documents. The fund is targeting a gross internal rate of return of 20 percent.

Speaking to Secondaries Investor in October, Aberdeen’s head of secondaries Patrick Knechtli said sponsors were increasingly agnostic on whether capital came from a secondaries or co-investment pool. The firm targets later-stage co-investments, which have similar characteristics to single-asset secondaries deals.

“On the co-investment side, we like situations where we are backing an incumbent GP,” he said. “This might be where a sponsor owns a particular business, is looking to do an add-on and raise new capital from co-investors. They’ve been in a business for a while, got beyond their initial 100-day plan and really understand what they’ve bought.”

The 10 secondaries funds to hold a final close during the first quarter of this year raised a combined $18.07 billion, Secondaries Investor reported in April. This was down on last year’s peak of $24.27 billion, but still the third highest first-quarter total after the $19.74 billion raised in 2017.