General Atlantic has amassed $7.8 billion for its sixth flagship growth fund, GA 2021 – its largest vehicle – securing capital commitments from a wealth management channel for the first time.
The New York-headquartered growth fund had a target of $5 billion, according to a statement. The fund received commitments from new and existing LPs, including family offices, endowments, foundations and institutional investors.
The firm raised approximately $1.2 billion from a wealth channel via feeder funds from JPMorgan, BNP Paribas and Bank of Singapore – an investor base the firm has tapped for the first time, a source with knowledge of the fundraise told affiliate Private Equity International.
General Atlantic, which typically gathers at least $25 million per investor, does not have the infrastructure to onboard and manage smaller investors, the source said. Leveraging the funding banks’ platforms was a good way to tap into a capital base that has strong appetite for growth and tech assets, the source added.
GPs have increasingly tapped the wealth management platform for capital. KKR expects between 30 and 50 percent of new capital raised over the next few years to come from the private wealth channel. Blackstone, Ares Management and Apollo Global Management have also in recent weeks highlighted the significance of individual investors in their near-term capital-raising targets.
Along with the $7.8 billion raised for GA 2021, the firm gathered a further $16 billion via its five-year managed accounts and evergreen accounts programs, taking its total committed capital base to $23.8 billion.
General Atlantic’s capital structure differs from most PE firms in that it invests out of a single, global pool of capital. While the commingled fund is typical with most fund structures and is invested in three to four years, the managed and evergreen accounts allow investors to make or increase investments at any time. Investors can, for example, start with a $100 million commitment and decide to increase their commitment later.
Fund terms differ slightly. GA 2021 is charging a 1.6 percent management fee, a MOIC hurdle of 1.25x on a cost basis, and 20 percent carry on the net profits. It is understood that the evergreen fund, meanwhile, has a lower management fee – 20 basis points lower than the commingled fund or five-year managed account.
General Atlantic will deploy the same strategy as in prior years across the three pools of capital – backing high-growth, tech-enabled companies globally across consumer, financial services, healthcare, life sciences and technology. The typical equity check size is $150 million.
Capital raised via the commingled fund and managed and evergreen accounts will be invested in more companies, instead of increasing the average check size, PEI understands.
The firm intends to stick to doing minority growth deals, even as it scales up its infrastructure, portfolio value-add capabilities and management processes, the source added.