Mercer raises more than $4.8bn for sixth alternatives fund

Private debt accounts for as much as 45% of total commitments, the highest among strategies

Mercer said it has closed its sixth alternatives fund on more than $4.8 billion, with private debt accounting for some 40-45 percent of commitments. The latest fund includes a credit dislocation opportunities strategy.

The fund, Mercer Private Investment Partners VI, is the sixth and largest in the PIP series, the New York-based asset manager said. It is designed to give investors access to a wide spectrum of asset classes. The latest fund exceeded by 78 percent the commitments of its predecessor, PIP V, which raised $2.7 billion. PIP was launched in April 2020, according to PDI research. Mercer did not disclose the target amount for the fund.

The other asset classes in the fund are private equity, at 25-30 percent, including co-investments and secondaries; infrastructure, at 15-20 percent; real estate and real assets, 5-10 percent; and a US diversity, equity and inclusion strategy, as well as a sustainable strategy, which together account for as much as 5 percent, the firm said. The PIP series, which is managed by Mercer’s alternatives specialist team, allows investors to tailor their strategies and provides “scalable access to highly-rated managers and opportunistic deal flow via secondary and co-investment transactions”, according to Mercer.

Mercer didn’t disclose specific investors, except to say they are relatively equally distributed between North American and European limited partners. According to the PDI database, US investors include Bowling Green State University Foundation, James S McDonnell Foundation, Lenoir-Rhyne University, Luther College and The Grable Foundation.

“Investors are increasingly turning to private market investments because they potentially offer enhanced return prospects compared to public markets,” particularly in a lower expected return environment, said Raelan Lambert, global head of alternatives, at Mercer. He said that PIP funds pool client purchasing power “to achieve better diversification” and flexible access to private markets in a cost-effective manner.

Mercer has more than $26 billion of alternatives assets under management and $164 billion of alternatives assets under advisement as of 30 June.