Rothschild has closed Five Arrows Secondary Opportunities III (FASO III), its European mid-cap secondary fund, on €259m.
FASO III closed in excess of its €200m target and after only a few months of fundraising, the firm said today, adding it attracted strong interest from international investors including banks, insurance companies, family offices and a sovereign wealth fund.
FASO III has also completed its first transaction, following the purchase of a diversified portfolio of 17 European small and mid-cap companies from a financial institution.
FASO III specialises in European small and mid-cap secondary private equity transactions – a niche segment that continues to present attractive investment opportunities.
“FASO III’s easy fund raising effort, in a gloomy economic environment, confirms that innovative private equity funds remain high on the agenda of investors seeking opportunities that can preserve capital and also generate alpha in an adverse cycle,” said Marc-Olivier Laurent, head of Rothschild’s merchant banking division.
“FASO III’s focus on tailored liquidity solutions, in a market segment that falls below the radar of large publicised auctions, presents significant opportunities.
“We expect the current market environment will generate a steady flow of opportunities from sellers seeking liquidity driven by economic uncertainty, new regulatory constraints or simply the need to exit the asset class.”
Mireille Klitting, FASO III general manager, added, “The specialist nature of this segment requires specific expertise which our team has developed after almost 10 years working on European secondary mid-cap transactions.
“We are also able to draw on the resources of Rothschild’s global network of contacts and industry sector knowledge which enables us to quickly identify and analyse opportunities.”
Klitting said secondary investing provided an attractive proposition in the current market environment.
“Purchasing mature portfolios of funds, shares or direct companies significantly mitigates the risks associated with private equity investing.
“It offers a mix of attractive returns with a quicker payback which de-risk transactions early on following the deployment of the capital.”
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