Deutsche Asset and Wealth Management will use most of its latest private equity secondaries fund to buy limited partner fund stakes, Secondaries Investor has learned.
Deutsche closed its DB Secondary Opportunities III on its $1.65 billion hard-cap earlier this month.
Between 60 percent and 70 percent of Fund III will invest in LP fund stakes and the remaining 30 percent to 40 percent will be used for direct secondaries, recapitalisations and co-investments, said global head of DB private equity Carlo Pirzio-Biroli.
Deutsche’s core strategy remains focused on LP fund stakes but also targets different types of transactions depending on market price fluctuations.
“When the market tanks, we try to buy plain vanilla funds at attractive pricing. When the market becomes more expensive, we focus on off-market, M&A intensive deals that are pursued by a smaller group of competitors,” Pirzio-Biroli explained.
Fund III’s strategy isn’t dissimilar to that of Deutsche’s prior secondaries funds, despite the new fund being significantly larger. Fund II closed on $614 million in 2012 and is fully deployed.
Pirzio-Biroli declined to disclose how much of Fund III would be deployed by year-end but he emphasised the fund would be deployed in between three and four years, to provide vintage diversification.
“Even if we have the ability to [deploy it quicker] we wouldn’t want to because it’s important to diversify by year of acquisition.”
Deutsche will aim to deploy Fund III in between 30 and 35 transactions, exposing it to more than 100 funds and 500 companies.