SL Capital holds $213m first close for third secondaries fund

This close takes the group more than halfway to the fund's overall target of $400m, with a final closing anticipated in the next six to nine months. The new fund will target niche areas of the private equity secondaries market.

SL Capital currently manages two other secondaries-focused funds, the 2014-vintage SOF I, which raised $190m, and SOF II, which closed on $291m in 2015. A source close to the matter stated that these vehicles effectively invested in parallel, with SOF I now fully committed, and SOF II close to being fully invested. 

Investors
LPs in the fund include the San Bernardino County Employees' Retirement Association, the Surrey Pension Fund and the Bedfordshire Pension Fund, alongside several other UK-based local authority pension funds. unquote" understands that the manager will net 10% carried interest over a 10% hurdle, with LPs paying a headline management fee of 0.75%, with discounts offered for larger commitments.

For a full list of LPs committing to the fund, see unquote" data's dedicated fund profile

Investments
According to the background information received, SOF III will target less competitive areas of the secondaries market, stakes in small-cap or mid-market private equity funds and more complex secondary transactions. In line with SL Capital's two previous secondaries funds, SOF III will target fund interests with a minimum level of funding, ensuring a high degree of visibility into the underlying portfolio. Interests acquired by SOF I and II were on average 78% funded.

The seven previous secondary deals closed by SOF I and II ranged from $11.6m to $70.4m in size, with a mean of $34.5m. This strategy of looking for small to mid-size tickets contrasts with the typical strategies of the larger players operating in the secondaries market, such as French GP Ardian, which closed a $10.8bn secondaries fund earlier this year, or the likes of Coller Capital, HarbourVest Partners, Lexington Partners and Pantheon.

People
SL Capital Partners – Patrick Knechtli (head of secondaries); Cameron Graham (investment director).

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