ICG expects to raise more for its latest flagship GP-led secondaries-focused fund than its $5.3 billion predecessor and will rely on new LPs to the strategy to help its vehicle size grow.
The London-listed firm’s Strategic Equity unit held a first close for its ICG Strategic Equity Fund V this financial year, chief financial officer Christopher Bicarregui said on a first half-year 2024 earnings call on Wednesday.
Fund V has raised at least $2.77 billion out of a $6 billion target as of September, according to Secondaries Investor data.
“Strategic Equity, we still have quite a long way before we finish the fundraising, but it’s looking reasonably good,” chief investment officer and chief executive Benoît Durteste said. “All three [flagship funds in market] are in very good position to raise more than we did in the previous vintage,” he added.
ICG’s challenge will be to convince new LPs to invest in the strategy, according to Durteste.
“The constraint on Strategic Equity is clearly on fundraising – not necessarily because of the current more challenging environment, but because this is a relatively new asset class,” he said.
The firm has LPs who are “real fans” of its Strategic Equity strategy, which focuses on single-asset continuation fund processes, Durteste said. Still, there are a number of investors who are unsure as to the attractiveness of the strategy and how it would fit in their asset allocation buckets, he added.
“It’s being portrayed in the market as a subset of secondaries whereas really, it’s not a secondary activity at all. It’s much more of a private equity activity. I think the market is still trying to find its footing.”
The Strategic Equity team, led by global head Ricardo Lombardi, brought on a former Blackstone Tactical Opportunities managing director, Andrea Serra, to lead Strategic Equity in Europe last year, as Secondaries Investor has reported.
ICG Strategic Equity IV beat its $5 billion target to raise $5.3 billion in the first half of last year, according to Secondaries Investor data.
ICG raised $5 billion in total over the six months and is on track to raise at least $40 billion by March 2024, Bicarregui said. The firm also held a first close for its debut LP Secondaries fund in the first half of the financial year, according to Durteste.
On dealflow, Durteste said there was no limit on demand for continuation funds.
“A lot of private equity sponsors would love to improve their DPI numbers and short of a full exit, doing a continuation vehicle makes a lot of sense,” he said. “This is the one strategy where we don’t have to do any origination. The phone keeps ringing.”