Northleaf deploys almost half of debut fund

The Toronto-based fund manager's debut secondaries fund has invested in North American buyout and venture capital funds.

Northleaf Capital Partners, the Toronto-based private equity and infrastructure manager, has invested 45 percent of its debut secondaries fund, according to managing director Daniel Dupont.

About eight to nine deals have been completed over the past year through Northleaf Secondary Partners, a $255 million vehicle dedicated to global secondaries transactions, including the purchase of a portfolio of five positions in Europe and Asia from a European bank.

“The market is hot and there has been a lot of liquidity generated by the funds over the last month,” Dupont told Secondaries Investor in London. “For one transaction that we closed in April, we have already received 30 percent of what we paid, through distributions. We’re seeing very quick cash back and returns.”

Northleaf prefers mature positions where the majority of the fund has already been drawn down.

“When one buys secondaries, you buy companies and the GP’s capacity or ability to exit the investments,” Dupont said. “Also, because we buy mature funds, which are often more than 80 percent invested, we know better the risk opportunities related to the companies we buy. Our job is to make good realistic projections on timing and exit valuations.”

Roughly 60 percent of the deployed capital has been in North American deals and the rest in Europe and Asia, with a focus on buyout funds.

The fund has a four-year investment period. In August 2014, the firm said it expected the fund to be fully invested in around three years, Secondaries Investor previously reported. The fund was 22 percent invested last August.

Northleaf may start raising a second dedicated secondaries fund in 2016 or 2017 and will target its existing Canadian investor base as well as global investors for the first time, Dupont said.

Northleaf Secondary Partners held a final close in May last year after about a year of fundraising, exceeding its $200 million target. The fund attracted commitments from new and existing limited partners including public pensions, university endowments and family offices.

The firm has around $700 million available for secondaries investments, or around 10 percent of its almost $7 billion assets under management, because it allocates some of its global flagship funds to secondaries, Dupont said.

Northleaf spun out of TD Capital Private Equity Investors, the private equity fund of funds and co-investment arm of Canada’s TD Bank Financial Group in 2009. The firm also has offices in London and Menlo Park.