Kline Hill Partners, the small secondaries firm launched by a former Willowridge executive, is preparing its third fund as it continues its pace of steady growth, a person with knowledge of the firm told Buyouts.
Kline Hill Partners III will target $425 million, the person said. The pool’s cap is not clear. Fund III will likely be launched in September, the person said.
Kline Hill, formed by Mike Bego in 2015, just closed its second fund last year on $357 million. Fund II is around 70 percent committed, the person said. Kline Hill closed its debut fund on $180 million in 2016. Bego and Partner Jared Barlow are principal owners of Kline Hill Partners, according to the firm’s Form ADV.
Few firms pursue a strategy like Kline Hill, which allows for a robust sourcing universe. The firm typically purchases LP commitments in the single-million-dollar range, primarily in buyout and venture, but can also target stakes in energy, real estate and other private markets. “Kline Hill believes that smaller transactions, especially if complex, tend to be overlooked by most other buyers,” according to the firm’s Form ADV.
Of the estimated $55 billion of total secondary volume in 2017, around 10 percent is in the small end of the market, Bego told Buyouts last year. This means deal flow of about $4 billion to $5 billion a year. “We’ve closed over 10 different fund-of-funds terminations in the past 18 months; over 350 different individual [underlying] funds,” Bego said last year.
Kline Hill will be raising its fund in a hyper-busy secondaries market that some advisers believe is on track to breach $90 billion in total activity. Evercore and Greenhill Cogent estimated first-quarter volume at around $42 billion.
Action Item: Check out Kline Hill’s Form ADV here: https://bit.ly/2HDK0z6