Whitehorse seeks up to 20 transactions with Fund VI

The preferred equity specialist plans to complete five to 10 transactions annually, with each ranging from $100m-$750m in size.

Details about Whitehorse Liquidity Partners’ investment strategy for its sixth flagship fund have been unveiled in documents prepared for a pension board meeting.

Whitehorse plans to structure 15-20 transactions using its Whitehorse Liquidity Partners VI fund, according to documents prepared for the Minnesota State Board of Investment’s 21 February meeting.

The transactions will generally range from $100 million-$750 million in size, according to the pension documents. Whitehorse will seek to complete five to 10 transactions annually during Fund VI’s investment period, which will end three years after the initial closing date, the documents show.

The US pension recommended a commitment of up to $125 million to Fund VI, according to the documents. Other investors in the fund include Virginia Retirement System and Maryland State Retirement and Pension System, each with a commitment of $250 million, according to Secondaries Investor data.

Fund VI launched in October with a target size of $6 billion, Secondaries Investor data shows. Its predecessor fund, Whitehorse Liquidity Partners V, closed on $5.3 billion against a $5 billion target in July. Fund V generated a net internal rate of return of 17.9 percent and a net distributed to paid-in ratio of 0.3x as of 30 September, according to the pension documents.

The Toronto-based preferred equity specialist has three different applications of its strategies, according to the documents. These are: LP Financing, which provides preferred equity to allow LPs to generate liquidity from their portfolios without having to sell; LP Purchase, which involves buying portfolios outright before splitting them into preferred and common equity tranches and syndicating the common equity; and GP Financing, which offers fund-level liquidity to GPs to invest in portfolio companies and injects liquidity into GP management companies.

It is unclear if the 15-20 issuances in Fund VI will involve all three types of applications. Whitehorse declined to comment on fund details.

“By creating structured financing solutions, [Fund VI] can capitalise on market demand for flexible alternatives to traditional financing arrangements,” according to the documents.

Whitehorse was founded in 2015 by former CPP Investments secondaries head Yann Robard. It has been expanding its global reach, with partner Rob Gavin set to lead the firm’s first base outside Canada in London, Secondaries Investor reported last February.

The firm had raised $14.8 billion as of the end of November, according to the pension’s board meeting documents.

Preferred equity and other structured offerings made up 14 percent of the $48 billion GP-led deal volume last year, down from 19 percent in 2022, according to Lazard’s Secondary Market Report 2023. Despite the dip, the report said that “secular trend are still demonstrating a demand for more structured solutions to introduce liquidity”.