Aberdeen Asset Management, the largest private equity fund of funds manager in the UK as ranked by Towers Watson, is preparing to ramp up its secondaries business in anticipation of an uptick in deals fuelled by macroeconomic volatility.
The firm invests up to 30 percent of its private equity portfolios in secondaries. Opportunities from both market volatility and central bank driven liquidity needs could see this share expand, the firm’s head of secondaries Colin Burrow told sister publication Private Equity International.
“We are very opportunity-based in that regard,” Burrow said. “We will be deploying capital if there are interesting opportunities coming into the market as a result of investors decreasing their allocations to the UK and Europe.”
Aberdeen’s strategy has been to focus on less efficient parts of the lower and mid-markets. The firm doesn’t deal with big industry names so deals are slightly less competitive, Burrow said.
According to PEI data, Aberdeen is currently investing FLAG Venture Partners IX, which closed on $88 million in 2015; FLAG Private Equity VI, which closed on $295 million in October; and FLAG Private Equity V, which closed on $217.3 million in 2012.
The Scotland-based firm, which has $32 billion in alternative assets under management, invests from dedicated funds of funds that are comingled between secondaries and other products.
Burrow, who is based in the firm’s Edinburgh office, said macroeconomic factors are driving pricing higher, and this is translating into higher secondaries pricing.
“We’re trying to stay focused on opportunities where we have an information advantage and the detailed work,” he said.
Burrows said that while there has been some volatility in UK-specific portfolios, this was likely an instant market reaction to Brexit. A steady stream of opportunities has continued post-Brexit, and UK-focused funds have not experienced a significant pause in capital deployment.
According to PEI data, Aberdeen has made primary fund commitments to Graphite Capital Partners VIII, which closed on £475 million ($764 million; €564 million) in 2013; Activa Capital Fund III which raised €206 million in 2013; and Sofinnova Capital VII, which raised €240 million in 2012.
The firm has also committed to well-known mega funds, including the 2012-vintage, €5.3 billion Fifth Cinven Fund, and the behemoth €8.5 billion Advent International Global Private Equity VII, also from 2012, according to PEI data.
The firm is currently investing in Aberdeen Private Equity VI, which raised $225 million in 2015.