Pomona Closes Sixth Fund With $821M –

F. Scott Fitzgerald wrote that there are no second acts in American lives. He was right, unless you’re talking about the private equity world. The private equity secondary market is thriving, allowing private equity investments to have a kind of second chance. The latest firm to announce the close of a large dedicated secondary fund is Pomona Capital. The New York-based firm announced last week that it closed its sixth dedicated secondary fund, Pomona Capital VI, with $821 million.

The fund is oversubscribed, according to the firm, which says it initially sought $600 million. According to Pomona Chief Executive Michael Granoff, the firm turned away “another few hundred million.” He said that the new fund did not have a lot of space for new limited partners. However, among the new LPs Pomona added are the State of Florida and the State of Wisconsin as well as Paris-based pension authority Caisse de Depots.

Granoff declined to say which LPs were turned away, but pointed out that no large public pensions were denied the opportunity to invest as a result of disclosure issues. He cites longtime and returning investor University of Texas Investment Management Corp. (UTIMCO) as evidence of that. He says that the firm takes pains to add limited partners that will bring strategic benefits to the firm. Limited partners in previous Pomona funds include BancBoston Investments, Blackstone Management Corp., Chase Capital Partners, Siguler Guff & Co. and South Ferry.

Pomona Capital VI will purchase buyout and venture capital funds as well as direct secondary portfolios.

Its last dedicated secondary fund, the $582 million Pomona Capital V that was fully invested as of Q2, is approximately 25% invested in venture capital assets.

The new fund has made commitments but has yet to formally close a deal, though the firm expects to do so within the next 60 to 90 days. The fund’s geographic focus will remain on North America and Europe.

Granoff says that the firm’s goal is to always keep its funds modest. “In a way we’re trying to have the advantages of being small and advantages of being large at the same time,” he says. “Part of that is being dynamic with LPs.” He says his firm’s frequent communication with its limited partners gives it an added advantage in sourcing deals and performing due diligence.

This sourcing of deals is central to Pomona’s strategy, as it goes out of its way to find non-competitive deals. The firm has two of its five partners exclusively dedicated to finding such deals. “One of the things we like about our strategy is that we can wait for our pitch,” says Granoff. “We don’t have to race to put money to work.”

In other related news, earlier this year Pomona closed Pomona Partnership Holdings IV, its fourth fund-of-funds, with $250 million. The firm initially set out last fall to raise $200 million and raised its goal due to increased limited partner demand.

Private equity firms that count Pomona as a limited partner include Alloy Ventures, Bain Capital, Boston Ventures, Carmel, Charterhouse, Clayton, Dubilier & Rice, Doll Capital, Freeman Spogli, Green Equity, Hellman & Friedman, J.W. Childs, Madison Dearborn, NEA, North Bridge, Polaris, Providence Equity Partners, Sevin Rosen, Silver Lake Partners, Spectrum Equity Partners, TA Associates, Warburg Pincus, and Welsh Carson Anderson & Stowe.

In all, Pomona currently manages more than $3.4 billion in assets across its six secondary interest funds and four primary interest fund of funds for a limited partner base made up of U.S., European and Asian institutions and families. The firm, which has offices in both New York and London, owns interests in more than 300 private equity funds, with investments in more than 2,000 companies. Pomona was founded in 1994.