SL Capital raises $190m for secondaries

SL Capital Partners, the private equity arm of Edinburgh-based Standard Life Group, has raised $190 million for its maiden secondaries fund, Secondaries Investor has learned.

The fund held a final close in February, after holding a $120 million first close towards the end of last year, Patrick Knechtli, a partner at SL, told Secondaries Investor’s sister publication Private Equity International.

The firm kicked off fundraising after it found a cornerstone investor in the middle of last year. The undisclosed investor is not the largest LP in the fund, however. The vehicle did not have a specific target, but SL had hoped to raise around $100 million, Knechtli said.

LPs in the fund are primarily pension funds and one large family office. The vehicle attracted 10 limited partners in total, of whom nearly 50 percent were new investors. Roughly a third of the investors came from North America, while approximately two-thirds came from the UK.

The fund is roughly 30 percent deployed in three acquisitions. It will continue to target smaller deals that other secondary players wouldn’t necessarily focus on, over the next three years, according to Knechtli.

“The aim is to target niche areas in the secondaries market and focus on areas where SL has a competitive advantage through our primary platform, i.e. when we know the managers and the underlying assets well already.”

Deals could range from between $5 million to $50 million for a specific fund.

“In theory, if the perfect portfolio deal came along we could invest the fund in one transaction, provided there was a degree of diversification across funds and managers.”

While this is SL’s debut secondary fund, the firm has been investing in secondaries as part of its fund of funds programme. However, SL was seeing deal opportunities that didn’t fit with its existing vehicles, so it decided to raise a dedicated secondaries fund for “more flexibility and firepower”, the firm said.

“We were seeing some very attractive deals that either fell outside the strategy of the fund of funds that we manage or where we already had existing exposure and we couldn’t take any more, which was frustrating because in many of these situations we were extremely well-positioned with the manager and sometimes with the seller,” Knechtli said.

Knechtli has led SL’s secondaries activities since 2009, when he joined the firm from Coller Capital. SL’s team is led by senior managing partner and chief investment officer Peter McKellar and managing partner Roger Pim, according to its website.