Golding Capital has held a final close for its latest buyout-focused fund-of-funds, Golding Capital 2018, on €375m.
The fund is the third vehicle in the GP's buyout strategy. It was first announced in June 2018 and held a first close in December 2018 on €165m.
Its predecessor vehicle held a final close in December 2018 on €364m.
Asked about the fundraise, Daniel Boege, partner and head of buyouts at Golding, told Unquote: "While we were happy with the overall outcome of the fundraise, without Covid-19, I think the fund volume would have been even bigger, since Q2 and Q3 were clearly impacted. We saw appetite coming back in Q3 and Q4."
"Our target was to reach the volume of the previous fund, which was €364m," said Boege. "We see in the market, and even pre-Covid-19, that funds-of-funds generally find it hard to grow. So the target was to achieve our previous volume, and once we had hit that, we were very pleased with the fundraise, especially given the 2020 fundraising environment."
Golding said in a statement that investors will be able to subscribe to the successor vehicle in its buyout strategy in H2 2021. "We are in the final stages of defining the strategy and features for the next fund, which we will launch in H2 2021, or even before, since this is in demand," Boege said. "We also have a co-investment vehicle for buyouts in the market and we will raise that in parallel."
The co-investment programme aims to hold a first close in spring 2021, Golding said in a statement.
Around one third of the LP base in Golding Capital 2018 is made up of new investors, while 70% of the fund's LPs are existing investors. The LP base comprises 29 investors, according to a statement.
"The LPs are almost exclusively German-speaking," said Boege. "A large amount in terms of volume is pension funds, followed by insurance companies, then savings banks, and then we have some endowments and family offices. In terms of the number of LPs, the savings banks are a large group, but they have smaller tickets."
The fund portfolio is expected to comprise around 300 buyout transactions, according to a statement. Golding intends to emphasise growth strategies in the software and technology sector, investing in fund managers with sector experience, networks and functional expertise.
According to Unquote Data, the fund has already invested in Hg Mercury 3, which held a final close in October 2020 on €1.3bn.
"Deployment is well under way," Boege told Unquote. "We have a classic co-mingled strategy combining primary, secondary and co-investments. The primary side is almost allocated already, but we have some left in the US. Primary is more or less 80% allocated. We have made seven co-investments already from this fund, as well as four to five secondaries transactions, which were done in late 2019 and 2020, and the start of 2021 has also been very busy."
"Typically we invest €10-20m on the primary side to build a diversified portfolio in the smaller mid-market," he added. "Of the funds we have invested in, about 80% are oversubscribed funds, where LPs might face cut-back situations in terms of allocation."
Co-investments will make up around 20% of the fund, Boege said, adding that the GP sizes tickets to reach an appropriate diversification for the fund. Two of Golding's co-investments from the fund were for European technology companies, the GP said in a statement.
"We were around 12% deployed in December 2020 but this is clearly moving up," said Boege. "This is relatively low given where we are on primaries, but it is driven by two effects. First, in the last two to three years, we have seen GPs coming to market early fearing a less benign fundraising environment and then requiring more time to finish their previous funds. And secondly, we have seen larger bridging lines in funds delaying capital calls."
According to a statement, around 80% of the fund has now been allocated across 17 target funds.
Golding Capital – Matthias Reicherter (CEO); Daniel Boege (partner, head of buyout).
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