Adams Street Partners to first-time managers and mega-fund managers: don’t call us, we’ll call you.
That seems to be the message from the Chicago-based funds-of-funds manager. Having wrapped up its Global Offering Program at $2.1 billion, and Global Opportunities Portfolio at $390 million in December, the firm is starting to hint at where those funds might land.
“Top down, we want to have balanced representation” between buyouts and venture, said Gary Fencik, who heads up business development for the firm. Within buyouts, however, Fencik said that “we don’t have set asides for emerging managers,” adding that the firm hasn’t typically invested with first-time funds unless run by “experienced” managers. Moreover, he said that Adams Street has been committing its capital in a way that is “underweighted relative to the [LBO] marketplace, particularly with respect to the mega marketplace,” and suggested the firm would continue to do so.
Fencik wasn’t at liberty to provide specific target ranges for buyout funds versus venture capital funds. But he offered that “one of the benefits to raising a new fund of funds each year is the ability to react and adjust to market conditions quickly, as opposed to raising a fund every three of four years and having to guess on market conditions over a longer period of time.”
That echos comments made publicly at a conference last spring by Adams Street CEO Bon French, who told attendees that the firm viewed the buyout markets as overvalued and the venture class as undervalued. Exactly where the bulk of Adams Street’s money will be directed remains to be seen, though at least two groups appear to be getting the nod: venture capital firms, and start-ups seeking venture financing.
Fencik said that Adams Street plans to commit relatively more money to venture capital funds than most institutional investors investing across all asset classes. Adams Street also plans to add a yet-to-be-announced partner to its Silicon Valley-based venture investing team, which directly backs mid-stage to late-stage startups.
The Global Offering Program raises capital ever year, investing it over a three to four years. Half its capital will go to U.S. firms, 40 percent to firms abroad, and the remaining 10 percent to direct investments in startups and buyout deals.
The Global Opportunities Portfolio commits capital to some 10 to 20 firms around the world over a one-year period.
In related news, Adams Street does not plan to replace Dennis McCrary, who was previously responsible for primary and secondary fund investing. McCrary left late last year for rival fund-of-funds manager Pantheon Ventures.