Adams Street Partners, the Chicago-based funds-of-funds manager and investment adviser, seeks $600 million for
The firm has three dedicated players on its co-investment team—Dave Brett, Dave Timson and Craig Waslin, who are part of a nine-person direct investing group that also handles growth equity plays and venture capital deals. The three have not yet started investing Fund II because the firm is still shopping with the $250 million raised for Fund I, which closed in 2006 with 22 limited partners.
Adams Street Partners will likely begin investing out of Fund II in the second half of this year, intending to make 20 to 30 investments. LPs that have made commitments include corporate and public pension funds.
Co-investments can be attractive for LPs because they carry fewer fees—a 1 percent management fee and a 10 percent carried interest, typically, versus the standard 2 and 20 that comes with traditional limited partnerships. And unlike in a blind pool, co-investing allows LPs to peer into the bowels of each deal, improving the ability to price each transaction more precisely and breeding a closer relationship between fund backers and managers.
“Our team can actually take a look at each investment opportunity that’s presented to us from a general partner … and see what they’re paying in terms of a purchase-price multiple,” said Gary Fencik, a partner and head of business development for Adams Street Partners. “That’s a big advantage relative to a fund-of-funds program where you just have a blind pool.”—N.G.