W Capital closes third direct secondaries fund on $750m hard cap


Scrabble-WDirect secondaries-focused private equity firm W Capital Partners has closed its third fund on its $750m hard cap six months after it had hoped to reach the total.

AltAssets revealed in December 2012 that the firm was eyeing a January final close for the fund, which had already held a $518m interim close by that point according to a source with knowledge of the fundraise.

But despite taking longer than hoped the firm has reached its target, just beating the $700m it collected for its last direct secondaries fund in 2008, and triple the $250m it gathered for its debut 2004 vehicle.

The firm said Fund III would continue to provide exit flexibility for private equity shareholders and growth capital for private equity-backed companies.

It added that the vehicle has already been tapped for almost $100m across six deals since the fund began investing in June last year.

The firm has already managed to exit two of those deals through the sale of Oriental Trading to Berkshire Hathaway in November and Neolane to Adobe Systems earlier this month.


W Capital managing director David Wachter said, “Our investors recognize the growing need for liquidity alternatives in private equity, our specialized solutions and our commitment to being the market standard for professionalism, transparency and certainty of execution.”

Investors included the New Mexico Educational Retirement Board, which committed $40m, and the Regents of the University of California, which parted with $50m.

Investment information from the NMERB website says W Capita is targeting a net IRR of between 20 and 30 per cent for fund III, and a cash multiple of 2.3-times.

The firm currently targets investments of between $5m and $50m across late-stage venture, growth equity and buyout co-investments.

It looks to take stakes of up to 30 per cent in companies with revenues greater than $25m, according to its website, which says it focuses on sectors including financial services, business services, technology, media, consumer and healthcare.

The firm attempts to pick up stakes in companies from private equity funds aiming to gain liquidity from their investments.

Those situations can arise when a firm’s LPs are seeking to reduce their exposure to risky assets such as private equity, fund of funds wishing to reallocate assets or company owners seeking liquidity.

Proskauer Rose served as legal counsel and Credit Suisse Securities as an advisor and exclusive placement agent for the fund.

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