Fund of funds manager Siguler Guff & Co. is either raising, or has plans to raise, more than $2 billion collectively for three new FoFs that will steer clear of investing in mainstream U.S. buyout funds.
• Siguler Guff BRIC Opportunities Fund II, in the pre-marketing phase, is likely to have a $700 million target. It targets funds that invest in Brazil, Russia, India and China;
• Siguler Guff Distressed Opportunities III, which will likely have a $1 billion target, will emphasize distressed investment managers;
• and Siguler Guff Small Business Opportunities Fund, a debut fund already in the market, has a target of $400 million to back domestic micro-cap buyout funds.
With about $4 billion currently under management, the New York-based FoF invests from offices in Kiev, Moscow and Shanghai. U.S. mega-funds are all but absent from its portfolio. The firm is a limited partner in Greater China-focused SAIF Partners’ third fund, which closed on $1.1 billion earlier this year. Other general partners the firm is reported to be backing include India-based ChrysCapital and London-based Actis Capital, which invests in Africa, China, Latin America, India and Southeast Asia.
“We’re under the radar,” says George Siguler, managing director and founding principal of the firm. Siguler says that the firm avoids mega-funds, because those fund managers “paint themselves into corners” with large deal sizes that leave them dependent on the stock market for an exit. And, he says, the mega-fund market is just too crowded.
Limited Partners in past Siguler Guff funds include the State-Boston Retirement System; the Oklahoma Police Pension and Retirement System; and the Pennsylvania State Employees’ Retirement System, which recently committed $10 million to the new overseas BRIC Opportunities Fund, according to meeting minutes of the state pension fund.
Siguler Guff was founded in 1995 when Siguler and Drew Guff carved out PaineWebber’s private equity group to create an independent entity. From its start, the firm catered to investors looking for less conventional private equity strategies. Among its early funds was Russia Partners Company, a $155 million fund that directly invested in companies in Russia and other former Soviet Union republics.
In 2000, the firm entered the funds of funds business with its $595 million Distressed Opportunities Fund. —Ari Nathanson