Ardian Fund of Funds has set a fresh fundraising record for the secondaries market after closing Ardian Secondary Fund VIII at $19bn, far ahead of the $14bn committed to its seventh-generation vehicle in 2016. The total, which includes $5bn of co-investment capacity, means that Ardian has now raised around $43bn for secondary investments over the past six years.
The new fund attracted investors from almost 40 countries, with particularly strong growth in commitments from Asian, Latin American and Middle Eastern LPs, particularly pension funds, sovereign wealth funds and insurance companies. This shows both the growing value that investors worldwide see in this asset class and Ardian’s strong international reputation as a leading secondaries player with more than 20 years’ experience.
“While this is another significant milestone in the growth of our Fund of Funds platform, more important is how it highlights the continued development of the secondaries market. This is now a mature market that will only grow in importance for private equity investors in the years to come.”
The Fund of Funds team believes that as deal flow recovers from the impact of Covid-19 in the months ahead, appetite for secondary liquidity among institutional investors will be strengthened by the fallout of the pandemic. This is expected to lead to more investors seeking to sell private equity holdings and better pricing for good quality assets.
Although the team expects some investors to use the secondary market to meet short-term liquidity needs resulting from the crisis, there are now many reasons why institutions choose to sell. These include portfolio rebalancing, crystallizing gains from more mature investments to re-invest in higher-growth opportunities, shifting investment strategies, reducing the number of GP relationships to focus on those that offer co-investment, and using the secondary market to validate net asset valuations.
“In the current environment, the secondaries market has a crucial role to play in providing institutional investors with liquidity,” said Vincent Gombault. “It is a vital tool for pension funds and investors in how they allocate investments in private equity.”
Benoît Verbrugghe, Member of the Executive Committee, said: “Our latest fundraise is testament to the strength and depth of our global platform, our excellent asset management capabilities, long-term relationships and the consistent returns that we have offered our investors.
“Over more than two decades, we have built a vast database of funds and underlying portfolio companies, which gives us a unique insight into the private equity sector. Ardian is well placed to take advantage of the secondary market’s increasingly important role in global finance.”
The successful fundraising cements Ardian’s leading position in the secondaries market and increases its capacity to execute the largest and most complex deals, where competition is limited. In this segment of the market, sellers expect global solutions that can be executed quickly. Ardian is uniquely placed to meet their needs thanks to longstanding relationships with the world’s top GPs, which are vital in providing certainty of execution, and its proprietary fund database, which gives detailed coverage of the underlying portfolio companies.
“This clearly demonstrates the level of confidence in Ardian and the secondaries platform that we have developed over the years. Our ability to offer our investors diversified private equity exposure underpinned by strong returns is more relevant and compelling now than it has ever been.”