Hermes GPE closes PEC IV on $603.5m

PEC IV was launched with a target of $350m and an original hard-cap of $450m in May 2018. The fund held a first close on $300m in February 2019.

The fund's predecessor vehicle, PEC III, closed on $389m in October 2017 and is now fully deployed. Peter Gale, head of private equity at Hermes GPE, said: "The progress of PEC III is exceptional. We're way ahead of our traditional target of 20% IRR and 2x money."

The Hermes GPE team have also started deploying $1bn, which the BT Pension Scheme (BTPS) invested in a separate private equity mandate. Some of the money provided by BTPS was dedicated to PEC IV. The allocation will be invested over three years and split equally between co-investments and funds.

The firm also raised a further $100m for a co-investment sidecar mandate from an existing investor.

Burness Paull provided legal advice.

Investors
The fund's LPs include BT Pension Scheme, State Teachers Retirement System of Ohio, the Local Pensions Partnership, CPP Investment Board, Hostplus, Ardian, Korea Teachers Credit Union, SEAH Group of Korea and Decalia Asset Management.

The firm has 10 investors across the PEC series, chosen on the basis of experience in the private equity sphere. While Hermes GPE attracts the majority of dealflow, the investors also generate dealfow for the firm.

The LPs match the geographically diversified portfolio of the firm, with three investors from Asia and the rest from North America and Europe.

Investments
Hermes GPE makes mid-market co-investments. PEC IV has already committed around $220m to 24 investments, with more deals in the pipeline, according to a statement.

While the firm is not prescriptive on the size of deals in which it invests, its investments normally have enterprise values of $100-500m.

People
Hermes GPE – Peter Gale (head of Hermes GPE Private Equity).

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