News & Analysis

Terms of Commonfund’s debut secondaries fund disclosed

The fund, which is targeting $150m, has two different sets of fees based on the size of limited partners’ commitment.

-

Commonfund Capital is targeting $150 million for its new dedicated secondaries fund, Commonfund Capital Secondary Partners 2015, according to documents presented to Weber State University earlier this year.

The fund of funds, run by investment manager Commonfund, will invest on the global private capital secondaries market and will focus on small, often less competitive transactions, from $100,000 original commitments to larger portfolios.

“Based on a bottom-up approach analysis with a focus on high-quality assets, the fund will take an opportunistic approach to finding investments that are purchased at discounts to intrinsic value,” Paul Von Steenburg, a managing director with Commondfund, wrote in the presentation.

Last year, Secondaries Investor reported the firm was gearing up to launch the fund, which would be led by managing director Cari Lodge, and that based on a regulatory filing with the Securities and Exchange Commission, it was raising $75 million as of December.

Commonfund declined to comment.

The main terms of the firm’s debut secondaries fund vary according to the size of a limited partner’s commitment.

For those committing less than $25 million, the management fee will be 1 percent of cumulative invested capital for the first six years of the fund and 1 percent of net asset value thereafter. Commonfund defines cumulative invested capital as total capital obligation, purchase price plus the remaining unfunded commitment for all investments made to date.

The carried interest is 10 percent and the hurdle rate is 8 percent for LPs investing less than $25 million.

For those committing $25 million or more, the management fee will be 0.65 percent of cumulative invested capital in the first six years of the fund and 0.65 percent of NAV thereafter. The carried interest is 6.5 percent while the hurdle rate is 8 percent.

The fund has a 10-year term with two potential one-year extensions. The target investment period is three years, according to the document.