Coller closes in on record fund, sets its sights on Asia

Coller Capital is pursuing a more aggressive strategy in Asia as it continues to raise the largest secondary fund in history.

The London-based firm recently held an interim close on Coller International Partners V, bringing it slightly closer to its ambitious goal of $3.75 billion. Its predecessor fund, which raised $2.6 billion, is more than 90% invested. Fund V investors likely to be getting a chance to re-up include Barclays Pension Funds, the California Public Employees’ Retirement System, CPP Investment Board, the State of Michigan Department of Treasury, Abu Dhabi-based Procific, the State General Fund of the Sultan of Oman and Wear Pension Fund.

Thanks to a rush of primary fund-raising, Coller has seen its deal flow involving Asian assets or sellers more than double over the last year, says Partner Hiro Mizuno. Earlier this year, for example, the firm acquired a stake in a fund managed by Bangalore, India-based ICICI Venture, as it invested $35 million for an interest in the India Advantage Fund. It was the first secondary deal involving a venture fund publicized in India, according to the firm. Coller has since completed a secondary deal in Hong Kong.

Mizuno says that the time is ripe for investing in Asia on all private equity fronts, and that the secondary market will ultimately benefit. He points out that early movers in the latest Asian private equity boom—firms that began investing in the late 1990s and early 2000s—are generating decent returns, particularly from restructuring deals in Japan and Korea. “People have seen real cash coming out of these deals, and that gave courage to other investors,” Mizuno says.

Coller is eager to push the trend along. Earlier this year, it published a survey that pointed to Asia-Pacific buyouts as among the most attractive opportunities for private equity funds. In 2005, Asia-focused private equity funds raised three times what they did in 2004, bringing in more than $19 billion, according to the survey. In the first half of this year, Asian private equity funds raised another $8.8 billion. Coller’s “Private Equity Barometer” survey also found that between 40% and 50% of private equity investors worldwide rate Asia-Pacific buyout opportunities as “very attractive.”

Asian investors, unlike their Western counterparts, typically only take advantage of the secondary market to exit the asset class entirely. Few use secondary deals as a tool for portfolio management. However, Mizuno says that secondaries are gaining traction in Asia, particularly in Korea and Japan.

People have seen real cash coming out of these deals, and that gave courage to other investors.

Hiro Mizuno, Partner, Coller Capital

Fund-raising frenzy continues

Rival secondary buyers continue to raise money hand over fist. The Camelot Group, a New York-based private equity advisory firm, estimates that the amount of dedicated secondary capital raised over the past three to four years totals about $34 billion.

Pantheon Ventures is seeking as much as $2 billion for Pantheon Global Secondaries Fund III.

Also, Switzerland’s Partners Group may raise up to $1.2 billion this year for its latest secondary fund, Partners Group Secondary 2006 Fund. The fund held a first close on $363 million thanks to strong interest from prior investors. New York-based Auda is believed to be in the market raising its second dedicated secondaries fund.

Meanwhile, New York-based AIG is raising a $500 million private equity fund that has a secondary investment component. AIG PEP IV Secondary has raised about $102 million, according to a regulatory filing. AIG PEP IV also has primary fund components that include buyouts, venture, co-investment and non-U.S. funds.