In a world in which tens of billions of capital is raised for secondaries investment – and that’s just Ardian – a $365 million fund close doesn’t necessarily capture the imagination.
Except in the case of France’s BEX Capital. The niche firm, which specialises in buying stakes in funds of funds and secondaries funds, held a one-and-done close on BEX Fund III – which reached more than triple the size of its €120 million predecessor, according to a statement last week. The fund closed above its $280 million target and $350 million hard-cap, with 90 percent of Fund II investors re-upping.
Notable about the fundraise was the social responsibility angle; it offered a special share class (“X-shares”) which were free from management fees and carried interest for non-governmental organisations and major non-profit foundations. In order to qualify for the carry- and fee-free offer, the non-profits needed to adhere to the UN’s Sustainable Development Goals. The move should allow such organisations to reinvest their gross return towards good causes.
The X-share component of the fund is relatively small, we understand. Originally the firm was allocating up to 10 percent of its fund size, but it has not disclosed the final number.
“We’re proud to be able to give modest support to our NGO investors by providing them with a return on capital free of charge,” said founder and managing partner Benjamin Revillon in a statement on Thursday. “We hope that this concept of X-shares will be replicated by other investment firms as a way to contribute to society and build bridges between finance and the non-profit world.”
BEX is not the only private fund firm to bake in an element of philanthropy to its fund structure. When European private equity firm Inflexion held a £2.25 billion ($2.92 billion; €2.6 billion) double fund close last year, it agreed with investors that 1 percent of the fund’s profits would go to the Inflexion Foundation, a new vehicle to channel donations to good causes.
The only complication for those firms that might want to replicate the “X-shares” model is drawing the line between the “worthy” and “unworthy”. You could argue that public pension funds struggling with funding shortfalls should make the grade.
Details aside, BEX’s model is refreshingly simple and elegant. The firm made the unusual move of moving last year from Paris to Nice, a city on the French riviera more readily associated with superyachts and sunshine than secondaries. Maybe the sea air gave the firm a new perspective.
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