The first LP fund-raising exercise by Crossroads Group since it split from Bigler Investment Management last year is gathering momentum and heading for a close around its $300 million (ecu 271 million) target within the next few months. In July, Crossroads 1997 Private Investment Portfolio (C97 PIP) had rounded up $112 million through a series of closings from December onwards. The firm has also brought some $200 million of new capital under management for segregated clients, for whom it operates tailor-made investment programmes.
C97 PIP is aimed predominantly at US investors. John McCrory, managing director of Crossroads (UK) described the vehicle as a “standard fund-of-funds aiming to provide exposure to a broad spread of investments”. However, individual investors are able to exercise a degree of choice over the level of portfolio diversity C97 PIP delivers. For the first time in its LP funds, Crossroads has included a “check-box” option, enabling investors to opt for US LBO and mezzanine funds, US venture funds or European funds across a range of stages. They may also choose to leave deployment of their commitments entirely to Crossroads’ discretion.
John McCrory said that, so far, around half the investors had chosen the mix-and-match option. “In particular, institutions with exposure to US LBOs see Crossroads as having specific ability to help build a portfolio in European or US venture funds, where it is harder to get access”, he explained.
For the portion of the fund where asset allocation is left to Crossroads’ sole discretion, John McCrory said the split is likely to be 50% US venture capital funds, 30% US LBO and mezzanine funds and 20% European vehicles, although the overall weighting may differ considerably from this model because a number of large investors allocate significant sums to a single fund category.
Carol Prosser of Crossroads Group in Dallas confirmed that BancOne Investment Management has invested a substantial sum in C97 PIP on behalf of BancOne’s pension fund and has also created a private-label feeder fund for its high-net-worth clients. She declined to name other investors, but said the participant line-up included major insurance companies, corporate and public retirement funds, foundations and a UK local authority pension fund. She added that virtually all the investors that have signed up for C97 PIP to date are new to Crossroads.
Since a first closing in December, C97 PIP has committed more than $60 million to funds, including: MTI 3, Candover 1997 Fund and Kleinwort Benson Equity Partners in Europe; and Sprout Capital VIII, Accel VI and Summit Ventures V in the US. John McCrory said C97 PIP would soon also make commitments to Advent Private Equity Fund II, Apax’s fifth French fund (story, page 5) and the new Acland vehicle (story, page 6).
Once C97 PIP reaches a final closing, Crossroads plans to launch a coinvestment and direct investment fund with a target of around $200 million, to be run by John Massey, who heads the group’s coinvestment programme.