The target for Newbury Equity Partners VI, disclosed last week in Form D documents, is up slightly from the vehicle’s predecessor, which closed two years ago on $2 billion.
The moderate step-up in ticket size is consistent with Newbury’s longtime focus on small and mid-cap deals. Acquiring LP stakes in private equity funds, the firm aims to be “the biggest small guy” in secondaries, sources told affiliate title Buyouts at the time of Fund V’s launch, “in a position to find the inefficient part of the market”.
Fund VI’s unveiling comes a few months after Newbury was acquired for $320.1 million in cash. For the buyer, listed real estate investment manager Bridge, the transaction created first-time exposure to secondaries.
“We think there’s opportunities to expand into real estate secondaries and other areas of the secondaries business that Newbury currently does not participate in as well,” executive chairman Robert Morse told affiliate title PE Hub this year.
This perspective was echoed by Newbury managing partner Richard Lichter in Bridge’s year-end earnings call.
When Newbury does deals, Lichter said, it sees most if not all of a selling LP’s assets. Because of this, an emphasis on “the things we know”, such as buyout and growth equity funds, could readily be extended to include “real estate funds or other things”.
It is unclear if Fund VI’s strategy will be broadened along these lines. Fund V, which was 95 percent committed as of early 2023, acquires LP stakes in buyout, growth equity, special situations, venture capital and other private equity vehicles. Deal sizes are typically up to $250 million, with no minimum, and often in the range of $1 million to $100 million.
The firm uses a global network to source privately negotiated opportunities in North America, Europe, Asia and other regions. Newbury has a particular interest in the US mid-market private equity space, according to Bridge acquisition materials.
“We’re very close to our investors and that’s why we’ve been getting 80 percent or more in re-ups and then new investors as we raise the size of the funds,” Lichter said in the earnings call. “And we would expect the same sort of thing now.”
Fund V was generating a 44.9 percent gross internal rate of return and a 27 percent net IRR as of September 2022, Bridge acquisition materials noted.
Lichter, a one-time Auda Private Equity and Lexington Partners executive, founded Newbury in 2006. To date, the Stamford, Connecticut-based firm has executed on more than 200 transactions engaging over 250 LPs worldwide.
Other members of the leadership team are partners Chris Jaroch, Gerry Esposito and Warren Symon.
Bridge and Newbury declined to provide a comment on this story.
This article first appeared on affiliate title Buyouts