Last month Stafford Capital Partners closed the eighth edition of its flagship timberland secondaries fund on $612 million. By secondaries standards, that sum is not enormous. But when it comes to timber and ag, that’s enough to place it near the top quartile – suggesting that Stafford, and its investors, reckon there is a decent crowd of LPs out there willing to exit funds. Given the painstaking due diligence it takes LPs to commit in the first place, that begs a question: Why do LP want to sell fund stakes?
Stafford’s fundraising success also indicates a growing appetite for secondaries (Timberland VIII’s predecessor closed in 2015 on $484 million). The advantages of getting into a fund that’s already at least partly invested are more straightforward: portfolio visibility, quicker diversification. That much should be obvious to many LPs. So how much of a bargain do buyers of fund stakes really tend to get?
Sister publication Agri Investor asked Stephen Addicott, a timberland partner at Stafford.