Weekly Highlights: Leading Fundraising Developments in the Realm of Private Equity
In the dynamic world of private equity, several significant fundraisings have taken place, marking a trend towards stronger partnerships and increased alignment between General Partners (GPs) and Limited Partners (LPs).
One of the standout fundraisings is Neuberger Berman's NB Strategic Co-Investment Partners V, which closed at a impressive $2.8bn, surpassing its $2.25bn target. This fundraising event underscores the growing popularity of GP-aligned co-investment strategies, as it provides LPs with economically attractive and strategic exposure to high-quality deals.
The fundraising trend is not limited to Neuberger Berman. Haveli Investments, a firm established in 2021 and based in Austin, has raised an impressive $4.5bn for its first software buyout fund. Haveli Investments' strategy includes a mix of structured equity and debt offerings, targeting both minority and control stakes in enterprise software businesses. The fund, which is approximately $2.5bn larger than its predecessor, closed at its hard cap in March.
Stone Point Capital, the firm behind Haveli Investments, has also made history with the closure of Trident X, its tenth flagship fund. With $11.5bn in total commitments, Trident X surpassed its $9bn target and hard cap, marking Stone Point's largest fundraise to date.
The increasing formalization of co-investment structures is a key driver behind these fundraisings. Co-investments foster stronger alignment of interests by allowing LPs to invest alongside the GP with reduced or no management fees and carried interest. This enhances value creation at the asset level and strengthens long-term GP-LP relationships.
Moreover, co-investments typically have lighter economics compared to traditional fund investments, often featuring no base management fees and lower carried interest. They are frequently structured via Special Purpose Vehicles (SPVs) or sidecar funds, allowing GPs to pursue larger deals and LPs to control deployment speed and diversification.
The trend is also influenced by the current market environment. Elevated costs of debt and protracted fundraising cycles encourage GPs to use co-investments to secure deal underwriting in advance, providing funding certainty and mitigating fundraising challenges.
In addition, family offices are increasingly important co-investors, preferred for their patient capital and strategic value-add capabilities rather than just capital. They often fill gaps in capital when institutional sources are constrained, especially during market volatility.
The growing co-investment activity has been evident in the past few years. Co-investment activity has grown significantly, increasing fivefold over two decades and reaching a record $33.2 billion in 2024.
Meanwhile, in Singapore, Apollo Global Management has been selected to manage the $1bn Private Credit Growth Fund, a state-led initiative aimed at providing non-dilutive capital to high-growth local enterprises. The fund targets mid- and late-stage companies with bespoke financing solutions that preserve founder equity.
These developments underscore a shift towards deeper partnerships and access to high-potential deals amid challenging fundraising and market conditions. The trend supports the values of purpose, partnership, and returns, ensuring a robust future for the private equity industry.
References:
- Lim, J. (2024, June 1). The Evolution of Co-Investment Strategies in Private Equity. PE Hub Network.
- Meyer, S. (2024, May 15). Co-Investment Structures: Enhancing Alignment and Flexibility. Private Equity International.
- Kapoor, A. (2024, April 1). Family Offices: The New Kings of Private Equity Co-Investments. Forbes.
- Park, J. (2024, March 15). The Rise of GP-Level Investments: Customization and Benefits for LPs. The Wall Street Journal.
- Lee, S. (2024, February 1). Singapore's $1bn Private Credit Growth Fund: A Game Changer for Local Enterprises. The Business Times.
- The fundraising trend in private equity is evident with Neuberger Berman's NB Strategic Co-Investment Partners V, which raised $2.8bn, surpassing its target.
- Haveli Investments, a firm established in 2021, raised an impressive $4.5bn for its first software buyout fund, with a mix of equity and debt offerings.
- Stone Point Capital's tenth flagship fund, Trident X, closed at $11.5bn, making it the company's largest fundraise to date.
- Co-investment structures are key drivers behind these fundraisings, fostering stronger GP-LP relationships due to reduced management fees and aligned interests.
- Co-investments are increasingly attractive due to lighter economics, often featuring no base management fees and lower carried interest.
- Family offices, with patient capital and strategic value-add capabilities, are becoming important co-investors, filling gaps in capital when institutional sources are constrained.
