JPMorgan Private Equity Limited (JPEL), the London Stock Exchange-listed fund of funds, intends to deploy $150 million on the secondaries market over the next two years, according to a third-party report from investment bank Liberum.
JPEL commissioned the report to challenge investor views that it had fallen out of favour relative to private equity peers due to gearing and portfolio performance issues, arguing its share class, accelerating portfolio distributions and recent investment performance positioned it for a re-rating.
JPEL expects the average investment size to be $10 million across 15-20 fund interests and direct secondaries, a strategy it has employed since September 2008.
The report showed that JPEL’s secondaries investments between 2008 and 2013 have returned a 21.2 percent IRR and 1.68x return multiple, which it expects to see continue with its prospective investments, said the report.
The report also showed that JPEL has invested $288 million over the past four years across three vehicles, with an average IRR of 22 percent and a multiple of 1.5x; the firm said it shied away from engaging in expensive auction processes.
Listing the characteristic of its high quality secondaries, the firm said the must have;
- a two to four-year holding period;
- attractive entry values;
- low leverage;
- low capital expenditure requirements;
- have a recognised brand,
- guarantee minimum return thresholds
- contain proven growth forecasting dependent on growing economies and industries.
JPMorgan Private Equity Limited focuses on Europe, North America and Asia. Founded in 2005, it targets buyout funds, venture capital funds and special situation funds for investment.