Secondary specialist Pomona Capital recently announced the final close of its fifth fund at $582 million. Called PC V, the fund is nearly three times the size of PC IV, which totaled $213 million and closed in August 1998.
“About one-third of the equity in PC V comes from overseas [investors],” said Michael Granoff, CEO and founder of Pomona Capital, in describing Pomona’s goal to globally expand its capital base for its latest fund.
According to Granoff, Pomona has committed $150 million of Fund V capital to secondary interests, spread across 20 funds. “On average, the  funds are four years old and 75% funded. Buyout funds account for 75% of that total, with the remaining 25% being private equity funds,” he added.
PC IV’s split between buyout and venture capital funds was 83% to 17%, respectively.
Pomona’s fund close is the latest indication of the growing interest in secondary funds. Coller Capital recently announced the close of its $2.5 billion fund, Coller International Partners IV LP, which is the largest secondary fund to date.
Meanwhile, Pomona is content working within self-imposed, controlled parameters.
“We try to keep our fund size modest,” said Granoff, explaining Pomona’s risk-averse strategy. “In 2002, 95% of our transactions were completed in non-competitive environments.” Traditionally, Pomona has invested between $10 million and $100 million in selected funds.
“We are likely to see a strong deal flow for the next two, three years,” he continued, “based on the large amount of capital committed to private equity. Firms have raised billions, predicting tens of billions in deal flow. I don’t see that happening. Playing our risk averse game, we won’t need a tidal wave of activity to deploy our assets.”
Pomona’s five funds bring the New York-based private equity firm’s assets under management to approximately $1.3 billion.