Vision Closes Fund With $1.3B Of Buying Power

The direct secondaries market heated up a bit as London’s Vision Capital closed on a new fund with a buying power of up to $1.3 billion. The fund is the firm’s first blind pool of capital and comes at a time that the secondary market continues to see new entrants and increased competition.

The fund, Vision Capital Partners VI, is comprised of a “core fund” of approximately $450 million (€350 million). This pool of capital is expandable up to $1.3 billion through parallel investments with limited partners that will allow Vision to compete for a wide range of secondary buys. The new fund can move on buyout portfolios valued at between $26 million and $643 million.

The firm raised the funding relatively quickly, beginning its fundraising in the fourth quarter of last year and holding its final close in the first quarter of this year. Vision did not cast a very wide net and only approached limited partners that it knew from working on deals.

“There was a premium on structuring it right,” said Vision CEO Julian Mash. “We didn’t need to approach many investors to hit our goals in terms of available firepower.” He added that limited partners showed a lot of interest in the fund and that many were cut back significantly.

Limited partners in the fund include Goldman Sachs Asset Management, Landmark Partners, Pantheon Ventures, Adams Street Partners, HarbourVest Partners, the Bank of Scotland and the Graphite Enterprise Trust, among others. Goldman Sachs is the largest investor among the previous backers, while new LPs include Adams Street, the Bank of Scotland and HarbourVest.

Like its London counterpart Nova Capital Management and Swiss firm Cipio Partners, Vision has so far financed its deals using capital raised from larger secondary players and other larger buyers. It will still be able to pursue similar transactions, but with a blind pool of capital, the firm can now go it alone. Its previous five funds were raised on a per-deal basis.

Vision Capital specializes in purchasing direct private equity investments, with a particular focus on buyouts that is confined to its home market in Europe.

The firm says that the market for direct secondary portfolios is heating up and becoming more competitive as general partners grow accustomed to using the secondary market as a liquidity tool. “In our niche, we are beginning to see more players,” says Mash. “A key driver is the growing acceptance. …This is still very new but we’re seeing more interest as it becomes better understood and we do more of it.”

Vision Capital has gained notice with some of its exits. The firm sold Avebury Taverns to the Punch Taverns company for a reported $382 million. Avebury Taverns was the single largest investment in the five-company portfolio that Vision acquired from the CS Structured Credit Fund.

Also, In 2003 Vision acquired a portfolio of companies from Morgan Grenfell Equity Partners (MGEP), from which it has seen a flurry of exits. Included among those are liquidity events for Deloro Stellite Group Ltd., Wintherthur Technologies, AB Cerbo Group and Shearings Group Ltd.

Vision has also been active adding new properties into its portfolio. Last year, the firm agreed to buy a collection of seven companies from Legal & General Ventures (LGV) with a commitment of $155 million, which includes funding for follow-on commitments.

Vision Capital was founded in 1997 and is overseen by 11 employees. It has invested about $482 million in secondary deals over the last three years. — M.S.