Golding eyes 2024 final close for latest secondaries fund, targets 'undercapitalised' small- and mid-cap space

The vehicle has held a EUR 172m first close against its EUR 500m target, the firm said in an announcement. The fundraise was launched late last year, Wilmes said.

"The fund will be open in 2024 to allow for existing investors who will need to use next year's allocations to join," he said.

"Although allocations being tied makes things difficult on the fundraising side, it's great on the deployment side for us," he added. "We're seeing LPs managing their portfolios, selling off non-core parts, moving geographies, as this ties into what they want to do on the primary side.

"Our strategy is around buying quality assets and our approach will be the same," said Wilmes. "But the big shift is that in the past, we usually had to pay around par, but we're now seeing double-digit discounts for tier 1 GPs with tier 1 assets on both the LP and GP-led side."

Golding, therefore, sees a significant amount of opportunity ahead. "The small- and mid-cap part of the secondaries market is under-capitalised, there is no doubt about it," said Wilmes. "This space is much less competitive than the larger end. When we look at LP trades, there could be one or two others looking at the same situation, but we don't participate in auction-style processes."

Golding Secondaries 2019 held a final close in 2019 on EUR 280m, surpassing its EUR 200m target. The increased size of its latest secondaries fund will not affect its strategy, however. "We will be making a similar number of deals to what we have done in the past, but previously our co-mingled funds would have participated – we'll just be streamlining our secondaries deals into this fund," said Wilmes.

Investors
The fund's current limited partner (LP) base is comprised of 85% existing investors and 15% new investors, the firm said in the statement.

"All of our commitments so far are institutional money, largely from Germany as this is our home base of existing investors," said Wilmes. "But we're growing internationally and we have had a few international tickets as well, from Switzerland and Luxembourg. We'll be building on a similar type of institutional base but building on our German heritage."

Investments
The fund will target small- and mid-cap buyout secondaries. The firm's secondaries strategy deploys EUR 5m-EUR 50m tickets per deal, with an average historical ticket size of EUR 20m, Wilmes said.

The 2023-vintage vehicle, which is expected to have a three-year deployment period, has made five deals to date and is one-third drawn down. It will complete several deals in the "mid-20s", according to Wilmes. The vehicle has already passed the J-curve, according to the statement.

It will aim to build a portfolio with exposure to 100 companies, focusing on highly profitable and resilient industries with strong growth potential including business services, IT and communications. It will have an 80:20 split between European and US deals, Wilmes said.

The fund will aim to maintain its traditional split between GP-leds and LP stakes as it builds its portfolio. "We want to have a good balance between early distribution potential and longer holds," said Wilmes. "It's about finding a good balance between early DPI and situations with the potential for multiples to build."

The firm's deal sourcing is mainly focused on its GP relationships, he added. "We are a big primary house as well so we are close to our GPs and can track their portfolios where we are existing investors, building our pipeline."

Golding invests with "consistence adherence" to its ESG criteria and conducts "meticulous due diligence" for its deals, CIO and Managing Partner Matthias Reicherter said in the statement.

People
Golding Capital Partners – Richard Wilmes (managing director and head of secondaries).

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