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HQ Capital flagship secondaries fund investments revealed – exclusive

Details of Auda Secondary Fund IV's investments, deployment pace and key person replacements were revealed in a document seen by Secondaries Investor.

Details of HQ Capital‘s latest secondaries funds were revealed in the vehicle’s latest quarterly report, seen by Secondaries Investor.

The New York-headquartered firm’s 2015-vintage Auda Secondary Fund IV closed three transactions in the second quarter of this year – including via its Auda Asia Secondary Fund – representing approximately $34.5 million in new deal commitments, according to the vehicle’s 2Q 2019 Quarterly Report.

The three deals were:

  • Project Coastal – a direct secondaries deal involving shares in a US high-growth lifestyle and apparel company. ASF IV acquired the shares at a 17 percent discount to the company’s valuation at the time. The deal commitment was $8.5 million and the transaction is expected to return 1.7x capital with a 41 percent internal rate of return.
  • Project Doha – a GP-led tender offer worth $11.2 million, comprising six companies managed by a European GP. The assets are mainly consumer-focused and concentrated in Italy and Denmark. The deal is expected to deliver 1.5x capital and a 15 percent IRR.
  • Project Jewel – a GP-led fund restructuring in which AASF committed $9 million. The transaction – a $440 million restructuring of a US-South Korea fund – comprised growth stage companies and “minor offensive secondary follow-on capital”. The project is expected to return 1.9x capital and a 21 percent IRR.

ASF IV, a $503.2 million vehicle, was 88 percent committed as of 30 June, the report reveals.

The report notes that in the wake of secondaries co-heads Chris Lawrence and Christian Munafo leaving the company in June, Stephen Wesson and Ben Wilson have been selected as their replacements as key persons. ASF IV’s key persons now comprise Stephen Wesson, Ben Wilson, Marc Lohser and Lucian Wu.

The report also shows that ASF IV acquired stakes in Investcorp’s European Buyout Fund 2019 A and B, as well as in two funds by Thomas Weisel Partners: the 2000-vintage Thomas Weisel Global Growth Partners – RISF and the 2008-vintage Thomas Weisel Global Growth Partners IV.

It is unclear when these interests were purchased.

Lawrence and Munafo left HQ Capital in June, as Secondaries Investor reported. Lawrence joined the firm in 2008 from a private investment firm while Munafo, who had led San Francisco-based Thomas Weisel‘s secondaries programme, joined the firm in 2015.

Munafo joined private securities platform SharesPost in August as its chief investment officer, as Secondaries Investor reported.

HQ Capital was founded as the US investment arm of the Harald Quandt family foundation.

A spokesman for HQ Capital declined to comment.