Cambridge Associates enters crowded secondaries market with fund launch

Cambridge Associates, one of the best-known names in the private markets consultancy business, is making its first foray into fundraising and managing a pooled private markets investment fund with the launch of a secondaries vehicle.

The Boston-headquartered investment consultant’s debut secondaries fund has a $250 million target, according to two sources familiar with the matter. The firm plans to raise between 50 percent and 80 percent of the fund from its LP clients, and the remainder from third-party institutional investors.

The fund will mostly focus on LP-led deals, with GP-led continuation funds likely to make up a minority of the portfolio, the sources said.

Cambridge Associates declined to comment on the fundraise and on whether it is planning to launch any other pooled vehicles.

The consultant is not the first to move into private fundraising and fund management. Hamilton Lane launched its first private equity vehicle seeking third-party capital in 1997, and its first secondaries vehicle in 2005, according to data from affiliate title Private Equity International. The firm has since grown to an asset management goliath, listing on the NASDAQ in 2017. It had $823.6 billion in assets under management and supervision as of end-September.

StepStone, which was founded in 2006, has grown to manage $137 billion in assets under management, with a total $588 billion in capital allocations, according to its website. It manages funds focusing on various private markets asset classes and strategies across primary fund commitments, secondaries, co-investments and directs. It listed in 2020.

Both Hamilton Lane and StepStone manage secondaries vehicles with third-party capital.

Secondaries is often seen as an efficient way for institutional investors to launch private markets investment programmes due to its ability to beat the J-curve, as capital can be invested from day one.

For Cambridge Associates, it has helped more than 90 clients with secondaries deals and its clients have committed $500 million in secondaries transactions, according to its website.

The development comes as institutional investors continue to seek liquidity from their private programmes. LP-initiated secondaries transactions accounted for 49 percent of overall secondaries transaction volume in the first half of this year – an uptick on the same period last year, when LP-leds made up 37 percent of volume, according to data from investment bank Evercore.

There are at least 91 funds in market targeting secondaries strategies with known or disclosed target figures, according to Secondaries Investor data.