Q1 fundraising steady despite fewer bumper closes

The 10 secondaries funds to hold final close in the quarter accounted for the third-highest Q1 total on record.

Secondaries fundraising held up in the first quarter, despite most of the largest players being out of the market.

The 10 secondaries funds to hold final close during the period raised a combined $18.07 billion, according to Secondaries Investor data. The figure, which is down on last year’s peak of $24.27 billion, is still the third highest first-quarter total after the $19.74 billion raised in 2017.

Coller Capital‘s International Partners VIII was the largest fund to hold a final close, hitting its $9 billion target. The fund received support from more than 200 investors, including Maryland State Retirement and Pension SystemPublic School and Education Employee Retirement Systems of Missouri and Fubon Life Insurance, Secondaries Investor reported.

Hamilton Lane Secondary Fund V raised $3.9 billion in February to invest in GP-led and LP- deals after just over one year in market. BlackRock Secondaries & Liquidity Solutions collected $2.4 billion, as part of a $3 billion overall secondaries programme, with a particular focus on opportunities presented by market dislocation.

A number of niche secondaries funds closed during the quarter. San Francisco-based Revelation Partners hit the $350 million hard-cap on its third dedicated healthcare secondaries fund, a 53 percent increase on its 2017-vintage predecessor, while Industry Ventures raised $850 million to invest in later-stage VC-backed companies though directs, limited partnership stakes and GP-led processes.

“Investors don’t view secondaries as a purely opportunistic strategy anymore. The market has become large enough that it’s possible to raise capital throughout the cycle,” said a US secondaries executive with a firm that closed a fund in the quarter. The executive acknowledged that some of its LPs may have committed less if they did not see secondaries as a distressed opportunity.

Last year’s record first quarter was driven by the close of Lexington Capital Partners IX, which raised $14 billion, making it the joint-largest secondaries vehicle ever.

Of the 10 largest buyers in the latest SI 30 ranking, which ranks buyers by the amount of capital raised in the trailing five years, Ardian, Lexington Partners, Goldman Sachs, HarbourVest Partners and Pantheon raised flagship PE funds during 2020 while Blackstone held final closes on flagship infrastructure and real estate secondaries funds.

A total of $95.57 billion was raised by secondaries funds in 2020, the highest annual total on record.