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Pomona Capital V beats target

Pomona Capital has closed its fifth secondary fund, Pomona Capital V, well above target at $581 million. Like its predecessors, the fund will be used to buy interests in private equity funds from limited partners looking to exit their investment before the term of the partnership. Pomona manages five secondary funds and three primary fund-of-funds totalling more than $1.3 billion.

While institutional investors are currently shying away from venture and buyout funds, their enthusiasm for secondaries is at an all time high. Last month Coller Capital closed a record fund of $2.5 billion dedicated to the market and there are a number of other players also raising capital at the moment.

The new fund was launched last year, three years after Pomona Capital IV raised $213 million for secondary investing. The new fund has already committed $145 million to purchase secondary interests in 13 private equity partnerships. Co-investment means the fund will not be limited in the size of deals it can do.

Granoff expects the investment period to be two to three years. He said: “We have already begun to invest this fund, taking advantage of both strong deal flow in the secondary market and the return of buyout and venture valuations to more normalised levels.” Next year Pomona anticipates raising a fourth fund-of-funds, which will be invested in primary fund positions and opportunistically in special situations or primary funds with large undrawn commitments.

In raising Pomona Capital V the firm succeeded in broadening its investor base by adding a significant number of European and Asian institutional investors. Up to a third of the fund’s investors are based outside of the US, reflecting the increasingly global nature of the secondaries business.