Partners Group teeming with $1.25B secondary fund

Partners Group has added its name to the growing list of players that have raised a secondary fund this year, as the Baar-Zug, Switzerland-based funds-of-funds manager closed its second dedicated secondary fund, Partners Group Secondary 2006, with $1.25 billion in commitments.

Partners Group invests in European secondary transactions, and prefers to buy interests in young funds between two and four years old and with 40% and 70% of their capital drawn.

Executives at Partners Group say that they could have raised more than the $1.25 billion cap, a sign of continuing LP demand for secondary partnerships. The firm has completely invested its premier dedicated secondary fund, a $609 million fund that closed in 2004.

One confirmed limited partner in the new fund is San Bernardino County Employees’ Retirement System, which approved a $40 million commitment in mid-March. Otherwise, the roster of LPs for the fund includes “the usual suspects,” of banks, corporate pension plans, public pension funds, endowment funds, insurance companies and trusts, according to a Partners Group spokesman. Known LPs in the first Partners Group secondary fund include Canada Pension Plan Investment Board, MetLife and New York Life.

The second fund did accept new LPs, but the firm was very selective in who it let in and did not go too far beyond a preferred set of core LPs, the spokesman says.

Partners joins a parade of secondary funds that have been raised this year. London-based Coller Capital has closed on at least $1.4 billion for its latest dedicated secondary fund, Coller International Partners V. Wth a target of $3.75 billion, that partnership aspires to be the largest ever dedicated secondary fund. Also, earlier this year, New York’s Lexington Partners closed on Lexington Capital Partners VI, the largest dedicated secondary fund raised at the time with $3.5 billion.

Other significant secondary firms raising funds include London-based Pantheon Ventures, which is seeking as much as $2 billion for Pantheon Global Secondaries Fund III. San Francisco’s Paul Capital Partners is believed to be seeking $1 billion or more for Paul Capital Partners IX. And New York-based AIG is raising a $500 million private equity fund that has a secondary investment component; according to regulatory documents, AIG PEP IV Secondary has closed on about $102 million. —Matthew Sheahan