Arcano Secondary Fund XIV launches with €300m target

The fund plans to hold a first close in November 2020, the GP told Unquote.

"We are living in a time of uncertainty, which makes fundraising a difficult activity, but our platform has a long and solid track record in raising and managing funds and creating opportunities," Ricardo Miró-Quesada, head and chief investment officer at Arcano, told Unquote. "We have managed 14 funds across different asset classes, building a large base of loyal investors. Our capacity to raise capital is particularly strong through our secondaries programme and we have already attracted interest from numerous LPs. This will allow us to hold a first close after only two months on the road."

Arcano Secondary Fund XIV will have the same size as its predecessor, which closed on €300m in 2016, surpassing its €250m target. "We decided to target the same size as our previous secondaries vehicle because our strategy focuses on investments across the lower end of the secondaries market," said Miró-Quesada. "In addition, we can adapt our vehicle to market opportunities and investors' needs without being conditioned by the wide investment cycles and massive size of larger funds."

Established in 2003, Arcano operates in three major business areas: investment banking, wealth management and alternative asset management.

The firm manages €6.7bn in assets across private equity, credit, infrastructure, venture capital and real estate, and specialises in offering flexible solutions to both investors seeking liquidity and managers recapitalising their funds.

Arcano is headquartered in Madrid, with additional offices in Barcelona and New York, and employs a staff of 180 professionals.

Investors
Arcano Secondary Fund XIV plans to build a large LP base composed of Spanish and international institutional investors, primarily pension funds, financial institutions and insurance companies, as well as large family offices and private banking investors. The GP told Unquote that the fund has already received several commitments and expects a high re-up rate from its previous investors.

"We have a wide and diversified LP base, which goes from large institutions to small private private banking clients," Miró-Quesada said. "Most of our LPs are Spanish, but we also have several investors from other European countries. In addition, we expect to attract some international investors from the US and Latin America in the coming months."

Investments
Arcano Secondary Fund XIV will invest in mid-market buyout and growth capital funds. "We can also consider venture capital and turnaround funds, but our main strategy is dedicated to mid-market buyout and growth capital vehicles, where we intend to invest at least 90% of our capital," said Miró-Quesada.

The fund will deploy tickets ranging from €1m to up to €100m, depending on the concentration of a transaction and the level of diversification of a portfolio.

At least 80% of the fund will be invested in operations across the secondaries market, targeting both LP stakes and GP-led transactions, while up to 20% will be dedicated to direct co-investments.

"The secondaries segment is structurally a very interesting market, which has always presented strong potential and has recently grown significantly," said Miró-Quesada. "Following the coronavirus outbreak, this strategy has become even more promising because it is able to outperform all other strategies in times of uncertainty and crisis. We expect excellent opportunities to arise both in the LP stakes space, where there will be an increasing number of investors with liquidity needs selling their stakes at interesting discounts, and in the GP-led transactions segment, where we are able to provide fund managers and companies with suitable solutions, while reaping high returns in the medium-term."

The fund will invest globally, with a particular focus on Europe and the US, where it plans to deploy around 80% of its capital with an equal split between the two regions. The remainder will be invested in the rest of the world, primarily in Asia and Latin America.

People
Arcano Partners – Ricardo Miró-Quesada (head, chief investment officer).

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