Motive raises USD 2.54bn across Fund 2 and co-investment vehicles

Motive Capital Fund 2 was registered in June 2020, according to Unquote Data. The vehicle originally had a USD 1.5bn hard-cap.

The GP has AUM of USD 5.5bn following the fundraise, according to a statement.

Gibson Dunn provided legal advice on the fund.

New York-headquartered Motive Partners was founded in 2016. It has offices in London and New York and has a team of more than 180 "investors, operators and innovators". The GP announced a strategic partnership with Apollo in June 2021. The deal was expected to see Apollo acquire a minority stake of up to 24.9% in Motive's management company, according to a statement issued at the time.

Motive's debut fund held a final close in November 2019 on USD 485m. It was fully deployed by June 2020, according to Unquote Data.

Fund 2 is therefore 3.7x the size of its predecessor in terms of primary commitments. According to a spokesperson for Motive Partners, "We had the opportunity to invest a meaningfully larger amount of money with Fund 1, which informed our target for Fund 2," they said. "And our conviction on the market is also very important. We have strong proprietary dealflow and conviction on what we do."

Investments from Motive's debut fund included Switzerland-based banking software platform Avaloq, which was sold to Japan-based NEC Corporation in a CHF 2.05bn (EUR 973m) trade sale. A source close to the situation told Unquote that the exit generated returns of 3x for Motive, but the spokesperson for the GP declined to comment on this.

The fund has also realised its stake in Ireland-based management compensation system provider Global Shares which was sold to JP Morgan at an EV of USD 750m, generating returns of 10x for Motive.

Investors
According to a statement, the fund is backed by public and private pension funds, sovereign wealth funds, foundations, financial institutions, institutional fund managers, family offices and high net worth individuals.

According to the same source close to the situation, Fund 2's LP base comprises more than 70 LPs and saw a high re-up rate. The LP base is made up of around 50% North American investors, with the remainder made up mostly of LPs from the Middle East and APAC, as well as some from Europe, they added. The spokesperson from Motive Partners declined to comment on the LP base.

LPs in the firm's debut fund included Allied Irish Banks and the Ireland Strategic Investment Fund (ISIF), according to Unquote Data.

Investments
Motive targets technology-enabled financial and business services companies and its second fund will follow the same strategy as its debut vehicle. Its primary sub-sectors are banking and payments, capital markets, data and analytics, wealth and investment management, and insurance.

Fund 2 has made ten investments to date, including UK-based wealth management platform FNZ, which it backed in a USD 1.4bn primary capital raise at a USD 20bn valuation, alongside Canada Pension Plan Investment Board; wealth management post-trade processing and tax reporting platform BetaNXT, which it acquired alongside Clearlake Capital from the London Stock Exchange Group; and Netherlands-based engagement banking platform Backbase, which the GP backed in a EUR 120m equity raise at a valuation of more than EUR 2.5bn.

The spokesperson for Motive did not specify an equity ticket range for the fund but said that the fund expects to make 15-18 deals in total, with a 60:40 ratio of North American to European deals.

The fund will make minority and buyout deals, which the GP categorises into three types: growth, such as Global Shares; advanced growth, such as its investment in FNZ; and legacy transformation, which includes companies such as business analytics provider Dun & Bradstreet or financial services firm Wilshire.

"We are not the sort of firm investing at a high valuation in a company that is losing money," they said. "We look very closely at earning capacity: how much money can a company make, how much of a market leader can it be, what is its market share, and what levers can we pull to help increase it."

The GP is confident of its current dealflow, the spokesperson said. "There is opportunity everywhere and being a specialist is a real privilege in terms of dealflow," they said. "Valuations are coming down and there is a lot more realism in the market today. We want to put capital to work to help organisations to build long-term and sustainable value. And we have a good amount of dry powder after today's fundraise."

People
Motive Partners – Rob Heyvaert (founder, managing partner); Bob Brown (founding partner, head of investor relations).

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