Distressed specialist Multiplicity closes third fund

Multiplicity Partners has held the final close on its third tail-end and special situations secondaries fund.

The Zurich-headquartered firm has collected $93 million for LTO Fund III, above its target of $80 million and “more than twice the size” of its 2018-vintage predecessor, according to a statement from the firm.

Ninety-seven percent of investors from its predecessor returned to back the fund, along with three dozen new investors, including family offices, high-net-worth individuals and institutions from Switzerland, the UK, Singapore and Israel.

“Through our fund, we will provide liquidity to sellers looking to clean up tail-end portfolios or exit funds that do not easily fit into traditional private equity secondaries strategies,” partner Andres Hefti said in the statement.

Secondaries Investor reported in October that Multiplicity had raised $50 million for Fund III, which has a hard-cap of $100 million.

Multiplicity targets underperforming funds and those with limited upside to net asset value across a range of asset classes, including private real estate, private debt, life settlements, litigation and royalties.

The firm’s investment thesis is based on internal research which found that top-performing mature funds tend to continue to perform strongly at the end of their lives, while bad funds continue to perform badly.

“In terms of loss aversion, selling a top-quartile fund at a substantial premium appears to be a much worse proposition than selling a bottom-quartile fund at a huge discount,” investment manager Christoph Landolt said in a Q&A posted on Multiplicity’s website on June 30.

Multiplicity is one of several niche secondaries firms to have closed funds in 2021, including healthcare secondaries buyer Revelation Partners, European small-cap GP-led specialist Mill Reef Partners and timberland secondaries investor Stafford Capital Partners, Secondaries Investor has reported.