Connection Capital has successfully completed a commitment, on behalf of its clients, to the third fund from 17Capital, a London-based specialist investor of preferred equity in private equity funds.
Due to the high level of demand from its clients, Connection Capital exceeded its original allocation to 17Capital Fund 3.
Connection Capital aggregates capital from its clients into a single, managed syndicate and therefore investors are able to participate in Fund 3 alongside well-known institutional investors at a much lower entry level than their institutional counterparts. All Connection Capital investments are available in multiples of GBP25,000.
The Fund closed in December 2014 with commitments of EUR500 million, just a few months after being launched in the summer, and above its target of EUR450 million.
17Capital Fund 3 will continue with the established and unique investment strategy of its predecessor funds by providing highly-flexible preferred equity to:
• Investors in private equity funds looking for early liquidity without selling assets on the traditional secondary market, thus preserving the future upside of their portfolios;
• Managers of funds seeking capital to make new or follow-on investments who can increase investment capacity with a more flexible source of funding than bank debt
Connection Capital clients were attracted to:
• An opportunity to access a fund that would typically only be available to institutional investors in an exciting market with significant growth potential;
• The unique investment strategy successfully employed by 17Capital, as demonstrated by the track record of the first two funds which accelerates the return of capital to investors
• The potential for attractive returns and at a lower risk to loss of capital than traditional private equity funds – attributable to the high level of coverage of asset value, the spread of risk through an underlying portfolio and the spread of investments in a fund;
• 17Capital’s strategy tends to produce non-volatile, predictable returns through its contractual preferred return and priority over distributions
• The strength and depth of the 17Capital team.
Claire Madden, Founding Partner of Connection Capital, says: “We are delighted to have secured an allocation for our clients to a fund managed by a team of the calibre and quality of 17Capital. The high level of demand from our clients to commit to this fund is a clear indication of the growing appetite from individual investors for this type of specialist investment opportunity which are often too difficult or too expensive to access.”
Connection Capital’s activity as an investor in specialist, alternative asset funds which are typically only available to institutional investors is increasing. Its clients recently committed to the second fund managed by Beechbrook Capital, a specialist mid-market mezzanine investor as well as the third fund managed by DN Capital, a top performing venture manager whose most high profile investment is Shazam.
Madden adds: “Clients are particularly attracted to the ability to pick and choose which funds to invest in without the restrictions and cost associated with a traditional fund of funds model.”
Connection Capital was advised by Gateley, one of the fastest growing law firms in the UK.
