SVG Advisers, the fund management business of private equity investor SVG Capital, is set to raise the cap on its latest structured private equity fund of funds, which is due to close as early as the end of the month.
SVG Diamond III had targeted €500 million, but according to one investor demand is likely to drive the fund up to around €700 million.
He said: “The performance of the first two Diamond products has meant fundraising for the third was easier.”
Diamond III will replicate the structure of its predecessors using a mixture of debt and equity to fund its investments.
This time SVG is using a revolving credit facility rather than its predecessors’ investment grade bonds. The investor said the credit facility was more flexible allowing the fund to draw down capital when it needed it rather than issuing bonds and having all the cash from day one.
He said: “Using bonds can put undue pressure on managers to put the money to work. As it is Diamond has warehoused assets, so 20 percent of capital will be invested immediately.”
The debt to equity ratio will be a 60:40 split, slightly less leveraged than Diamond II.
Diamond III will be focused predominantly on buy-outs and will have an over-commitment facility. It will purchase further secondary interests and make a number of primary commitments to private equity funds investing in western Europe and the US.
SVG declined to comment.
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