Secondaries investor Kline Hill eyes $2.7bn for Fund V, second GP-led pool

Kline Hill Partners unveiled its latest multi-strategy fundraising for small-market secondary opportunities, targeting up to a $2.7 billion cap.

Kline Hill Partners Fund V, representing the firm’s core LP secondaries strategy, is seeking $1.7 billion, according to sources and recently filed Form D documents. The amount includes up to $350 million as part of a fifth overage vehicle aimed at slightly larger deals than the main fund.

In addition, Kline Hill Partners Solutions Fund II, focused on GP-led transactions, is seeking up to $1.5 billion, $500 million of which will be part of the main fund, and the rest sitting in a separate pool, sources said. Kline Hill declined to comment.

The combined ticket size is a major step up from Kline Hill’s prior multi-strategy campaign. Last year, the shop closed on roughly $1 billion for three similar vehicles, including $525 million for Fund IV and almost $240 million for the debut GP-led fund.

The more ambitious goal may owe to an anticipated surge in secondaries investing, driven by pent-up demand, especially among cash-hungry LPs.

The global market perhaps gave early signs of this trend last year, when secondaries deal volume totaled $112 billion, up 4 percent from 2022, Jefferies reported. LP volume led the year-over-year increase, with GP-led activity picking up momentum in the second half.

Niche investor

Formed in 2015 by managing partner Mike Bego, Kline Hill has dedicated itself to the small end of the private equity secondary spectrum, usually below $10 million, Secondaries Investor reported. The space features more inefficiency, requiring specialized sourcing, as well as less competition, as it is often neglected by larger investors.

Kline Hill’s core strategy provides liquidity solutions to LPs. Deal types are portfolio transfers, single fund transfers and secondary direct transactions. Opportunities take in a range of assets, among them buyout, venture, growth equity, real estate and infrastructure, with sourcing done primarily in the US and Europe.

The solutions strategy takes a comparable approach vis-à-vis GP-led activity. Deal types are fund restructurings, multi- and single-asset continuation funds, sidecars and annex funds, LP tenders, strip sales and team spinouts.

Kline Hill reports closing more than 500 transactions. Last month, the firm co-led a continuation fund in support of TRP Capital Partners and management of GenOx Transportation, an industrial gas transportation company. Barings and Adams Street Partners also led.

And last year, Kline Hill was part of several deals, Buyouts reported. It was, for example, the lead buyer in a tender offer process run by Sun Capital Partners on two older flagship funds, with a staple provision of new capital for its eighth flagship.

Kline Hill is led by Bego, a former Willowridge Partners executive, and partner Jared Barlow, who before ran Sweetwater Capital. The pair oversee a team of more than 25 investment professionals in offices in Greenwich, Connecticut and Zurich, Switzerland.

(This story has been updated with new information from sources about Kline Hill Partners’ funds.)