PA Capital eyes real assets secondaries with sophomore vehicle

PA Capital, which rebranded from Private Advisors earlier this year, plans to make secondaries purchases with its second real assets fund.

Speaking to sister title Agri Investor, managing director Zac McCarroll said the firm’s PA Real Assets Fund II will focus on commitments to small specialist funds for about half of its investments, with the remainder likely comprised of co-investments and secondary transactions.

Agricultural private equity is not yet deep enough to support a high volume of secondary transactions, and there is a possibility of agriculture-focused co-investments from Fund II, he added.

Fund II closed on $242 million in April after securing commitments from corporate pensions, foundations, insurance companies and family offices. More than 70 percent of commitments came from existing PA Capital LPs. About 15 percent of its capital was raised from investors outside the US, including from Israel, Germany and Canada, according to McCarroll.

The fund has a 15 percent net return target.

McCarroll, who leads the real assets practice at the lower mid-market-focused unit of insurance company New York Life, launched PA Capital’s real assets division in 2014, joining the firm after seven years as a director at the University of Texas Investment Management Company.

LPs in Fund II are focused on its strategy having exposure to a diversified portfolio across real asset sub-sectors, and they appreciate that agriculture is among them, McCarroll said.

Predecessor PA Real Assets Fund closed on $205 million in 2017, according to data from sister title Infrastructure Investor.

There was $3.45 billion-worth of infrastructure funds that traded on the secondaries market last year, an almost 15 percent increase on the year before, according to Setter Capital’s Volume Report FY 2019. Real estate funds had $3.69 billion-worth of trading – an almost 37 percent decrease – while agriculture and timber funds had $170 million-worth of trading, up almost 30 percent year-on-year.

PA Capital is headquartered in Richmond, Virginia. Its latest dedicated private equity secondaries fund, PA Secondary Fund VI, launched in November and has raised at least $75 million, according to Secondaries Investor data.