- Private Advisors mindful of underlying fund size growth
- Firm closes latest fund-of-funds on $350 mln
- Seeing greater demand from Europe for small-market funds
“We’re more mindful than ever about underlying fund manager fund size growth,” Stringer said. “That’s where we end up earning our keep. Because the ones that stay constrained in their fund size growth are the ones that are hardest to access.”
Limited partners are often wary of managers who set exceedingly higher targets for follow-up funds, arguing larger funds could lead the GP to change its investment strategy. That said, successful managers who cap their fund sizes often have a hard time accommodating limited partner demand.
The Richmond, Virginia-based firm closed Private Advisors Small Company Private Equity Fund VI on its $350 million hard cap in June, exceeding its target by $100 million, according to a July 8 press release. The firm’s previous Small Company fund raised $340 million 2013.
“We actually had a hard-cap on this fund of $350 million that a few of our LPs asked us for. And we respected that, because we ask that of our GPs through our fund-of-funds,” Stringer said.
More than 50 percent of Fund VI’s capital came from investors in previous Private Advisors funds, according to the press release. Stringer noted that the firm received more interest from international LPs with Fund VI, adding “there seems to be more interest, particularly from Europe, in the small business space.”
As with previous Small Company funds, the firm will likely invest Fund VI in 16 to 17 funds over the next two to three years. Approximately half of the commitments will be re-ups with existing managers, Stringer said.
The firm’s 2011 Small Company fund netted a 3.75 internal rate of return as of December 31, according to Education Employees’ Supplementary Retirement System of Fairfax County documents. Fund V, which closed in 2013, netted a negative 6 percent IRR as of the same date.
“Private Advisors experienced [a] steeper J-Curve but IRR [is] improving as the portfolio becomes more fully-invested and begins to mature,” according to Fairfax County documents.