The Simsbury, Conn.-based secondaries firm launched Hybrid Secondary Fund earlier this year to invest in private equity funds that are less than 50% funded. The fund had a $400 million target. Merrill Lynch acted as its placement agent.
Despite market enthusiasm for the secondary funds, commitments to the first-time hybrid fund were not easy to come by. The effort, which launched earlier this year, hadn’t held closes on any capital. The firm decided to focus on raising its larger traditional secondary fund, tabling the hybrid fund until 2010, the source says.
To date, Landmark Partners’ 14th traditional secondary fund has raised $1.25 billion in commitments from 103 investors, according to a regulatory filing. The firm expects to meet the fund’s $2 billion target early in the first quarter of 2010. Merrill Lynch is also serving as placement agent on Landmark Equity Partners XIV. Landmark raised about $1.2 billion for its 13th fund, which closed in 2005.
Landmark has begun to deploy its latest fund, with 10% put to work already. Similar to other secondary investors, Landmark Partners believes pricing on stakes in the market is not low enough to buy aggressively. The firm’s activity has focused on traditional secondaries, but included structured transactions, in which the firm forms a joint venture with a seller looking to manage its asset allocation. The firm agrees to take on the unfunded portion of the seller’s commitment in exchange for a preferred position in portfolio cash flows.
A firm spokesman responded to PE Week with the following statement:
“Landmark has postponed its hybrid investment strategy and is currently focused on the deployment of secondary capital into mature secondary transactions. Landmark believes there is currently a significant opportunity to work with institutional investors to help them achieve their unique portfolio objectives and solve asset allocation constraints.
“Currently, Landmark is actively pursuing traditional secondary transactions in mature private equity portfolios and a variety of structured transactions with other institutional investors.” —Erin Griffith