DWS holds USD 550m final close for first PES fund

Harriet Matthews
11 November 2021

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DWS Private Equity has held a USD 550m final close for its first Private Equity Solutions (PES) fund, which will focus on mid-life secondaries.

Commitments to the fund also comprise discretionary co-investment vehicles, according to a statement.

The vehicle had a target of USD 500m and a hard-cap of USD 525m.

Germany-headquartered DWS was previously the asset management division of Deutsche Bank.

The PES fund was launched in 2019 following DWS's spin-off from Deutsche Bank via a partial listing on the Frankfurt Stock Exchange in March 2018, with the aim of increasing the scope of the firm's private equity strategy.

Mark McDonald, head of private equity at DWS, spoke to Unquote in 2020 about the firm's decision to invest in late-stage co-investments, as opposed to the typical approach of participating at the outset of a deal. McDonald told Unquote that the GP's strategy allows it to provide "conflict-free capital" for GPs, their underlying assets and their LPs midway through an investment period.

Investors
The fund's LP base is composed of 20 investors, including state pension funds, insurance companies, corporate institutional investors and family offices from North America, Europe and the Middle East.

Investments
DWS's first PES fund will target what it terms "mid-life secondaries deals", focusing on North America and Western Europe. The deals will generally see the firm make co-investments in partnership with lower-mid-market and mid-market buyout-focused GPs on single portfolio companies, generally two to five years after their initial investment, to provide additional capital for M&A and growth.

The fund can also provide partial liquidity or distribution to paid-in capital (DPI) on an existing portfolio company, or execute bespoke single-asset continuation fund deals.

The fund has made 12 investments so far and expects to make 15-20 deals in total. The fund will back deals valued at USD 20m-250m, but can partner with its LPs for larger co-investment opportunities.

DWS's investments from the strategy to date include Norway-based IT and software consultancy Cegal. Following the GP's investment in 2019, Cegal acquired market peer Sysco in August 2021, with shareholders including DWS, Argentum and Norvestor Equity becoming majority shareholders in the combined company.

People
DWS – Mark McDonals (global head of private equity).