Pantheon aims to fill mid-market ‘void’ with Fund VII target

The asset manager is targeting space left by the ballooning mega-fund market, according to documents from US public pension fund VCERA.

Pantheon, the 10th-ranked group in the SI 50 list of the largest fundraisers in secondaries, is targeting a niche for itself under the ballooning mega-fund market.

The London-headquartered alternatives manager is targeting $2 billion for Pantheon Global Secondary Fund VII, according to documents prepared by Ventura County Employees Retirement Association. The fund is sized “to fill the void” left by competitors raising larger funds, according to a pitch deck.

Those mega-funds include Ardian Secondary Fund VIII, which raised $14 billion last year, and Lexington Capital Partners X, which came to market in March and would surpass it by $1 billion if it hits its target.

The target for Pantheon’s Fund VII is in line with the 2018-vintage sixth fund, which closed above target on $2.2 billion in August 2020.

VCERA recently approved a $25 million commitment to the seventh programme, in line with its commitment to the sixth, and down from its $50 million commitment to the fifth, the documents noted.

Overall, Pantheon has returned 15.3 percent net for VCERA between its fourth, fifth and sixth funds. The sixth fund has a net return of 35.6 percent and a net multiple of 1.5 times.

Fund VII is targeting a net multiple of 1.5x-1.7x of invested capital and a 15 percent to 18 percent net IRR, according to the documents. It has collected nearly $160 million since launching in June and is targeting a final close sometime in October. The fund will offer early investors a discount of 10 basis points.

Fund VII will mainly invest in funds managed by North American and European managers with which Pantheon has made prior primary commitments. It will proactively target younger funds, where portfolio company valuations have yet to experience significant valuation write-ups, and resilient sectors such as healthcare and IT.

Pantheon expects to make 25-40 secondary investments over the course of two to three years, roughly evenly split between LP-led and GP-led deals, with a formal commitment period of five years. Fund VI was fully deployed in about three-and-a-half years.

Pantheon will commit at least 1 percent to the fund, which has a management fee of 87.5 basis points during the investment period and will attenuate afterwards. Carried interest is 10 percent over an 8 percent hurdle.

Earlier this year, the firm announced it was raising a dedicated single-asset fund, Pantheon Secondary Opportunity Fund. That fund has thus far raised $345 million, according to Secondaries Investor data.