Almost a year after closing the large secondary deal that netted them 150 private equity funds with $1.4 billion in original commitments, AIG Global Investment Group closed on the fund it is using to finance the transaction. AIG announced in mid February that it had a third and final close on AIG PineStar Capital with $700 million.
The fund is being used to finance last year’s large secondary deal that saw AIG purchase the private equity assets of Dresdner Bank’s Institutional Restructuring Unit (IRU). The deal put AIG on the secondary private equity map and was its first secondary buy.
The entire AIG PineStar fund is being used to finance the Dresdner portfolio. The fund consists of equity and debt components, and AIG declined to disclose the breakdown of debt and equity. There were other investors in the fund besides AIG including institutional investors, funds-of-funds and debt providers, but AIG did not release the names of any other investors. The fund closed at the end of January.
Harvey Lambert, a managing director in AIG’s private equity funds group, says that getting to this point was challenging. “The confluence of transferring the assets over while at the same time forming a syndicate to invest in them and doing that all at once was difficult,” says Lambert. “There were a lot of moving parts. That combined with the fact that they were inviting others to participate with us made it that much more complicated.”
The private equity portfolio AIG is using the fund for has $1.4 billion in original commitments. Neither AIG nor Dresdner would disclose the sale price of the portfolio. The portfolio is comprised of 150 fund commitments in North American and European funds. IRU Chief Executive Jan Kvarnstrm said in a statement at the time of the deal that Dresdner would exit nearly all of its private equity investments with the sale, which was conducted through a competitive bidding process.
Approximately two-thirds of the portfolio’s 150 funds are held by firms based in the United States and the rest are divided between Europe and Asia. The firms did not disclose the breakdown among venture capital, buyout and other funds. The deal was significant as the first secondary buy for AIG, which until then usually invested as a limited partner in funds. The buy boosted the firm’s LP investment by providing new funds and continued exposure to previously invested funds.