Glendower CEO: The larger the funds you raise, the easier it gets to raise them

Carlo Pirzio-Biroli, managing partner and chief executive of the secondaries firm, says it is easier to attract investors who want to write larger tickets – a difficult proposition with smaller funds.

Glendower Capital said on Monday it has closed its latest flagship on $5.8 billion, five months after Secondaries Investor reported the firm had secured more than $5 billion for Glendower Capital Secondary Opportunities Fund V.

The vehicle surpassed its its initial $4.5 billion hard-cap and $3.5 billion target.

Secondaries Investor caught up with Carlo Pirzio-Biroli, managing partner and chief executive of Glendower on the back of the fund close to discuss how the fund’s scale will give it more firepower in its mid-market target spot and how its acquisition by CVC has benefitted its business.

Fund V is significantly larger than its $2.7 billion predecessor and it’s the first vehicle you have closed since the CVC acquisition. Tell us about the fundraising process.

Our initial target was $3.5 billion and we ended up closing on $5.8 billion, including GP commitment and the co-investment sidecar, so it is more that we were anticipating to raise. But in fact, it is what we think works well for our strategy in this market.

Let me put things in context. When we started in this business 15, 20 years ago, the market was around $10 billion a year. Today it is over $100 billion a year, so it’s 10 times that. Similarly, our first fund was between $500 million and $600 million and today is $5 billion to $6 billion, so we’ve actually grown with the market.

In order to stay true to your investment strategy, you need to keep the pace with the market growth and with the size of what’s for sale: deals, LP stakes, GP-leds have all increased in size. This is a market where operational and financial scale matter. We continue to remain in our mid-size segment of the secondary market, which when I started 20 years ago was $500 million to $1 billion, and today is $5 billion to $10 billion.

How much did existing investors re-up, roughly, and how many new investors committed to this fund?

Secondary fundraising is always slightly different from buyout fundraising. In buyouts you aim to see a lot of consistency in the re-ups. Investors in secondaries are a little bit more opportunistic by nature, so they tend to come in and out of the asset class. However, we continue to see strong re-up support on the back of the secondaries market over the years becoming increasingly more established.

Raising larger funds while continuing to deliver performance also helps. In truth, the larger the funds you raise, the easier it gets to raise them. For example, you can attract larger investors who want to write large tickets, while remaining below 10 percent. Having spun off the business and recently become part of CVC also played very well with investors.

Has there been a shift for Glendower on the GP-led side of the market following your acquisition by CVC given managers may view the firm as competition? Is there more work you have to put in?

Actually, the contrary. This is something that we looked into quite carefully and we were definitely already getting some comfort from the fact that both Carlyle’s AlpInvest Partners and Blackstone Strategic Partners were operating quite well with GPs. So on the one hand we set up in a similar fashion – with all the appropriate one-way information barriers – and no GP to date has expressed any real concern.

To the contrary, the CVC tie-up has strengthened our credentials and it actually gives them comfort – being part of the platform that they could have a further interaction beyond the GP-led transaction. On top of that, senior dealmakers at CVC know their competitors personally quite well, which is actually quite fruitful to gain access directly to the most senior dealmakers at many GPs, whether for GP-leds – the top branded GPs are picky about who they want to work with – or LP-leds.

Carlo Pirzio-Biroli is managing partner and chief executive of Glendower Capital. He is based in London.