Siguler Guff closes third BRIC fund

The first was the departure of Patricia Dinneen, longstanding portfolio manager for the firm's investments in emerging markets. Dinneen had made no secret of her plans to leave and the handover to Ralph Jaeger was effectively a three-year process, but there was still a degree of investor uncertainty.

"Although it was text-book succession planning, some investors said they wanted to see how the performance shapes up and what the portfolio looks like and then be a candidate for the next fund," Jaeger tells AVCJ. "It's an understandable approach."

The second challenge came last summer as the US indicated it would begin a gradual scaling back of quantitative easing measures. Prophecies of emerging markets struggling due to capital flight and currency volatility became self-fulfilling - for a few months, at least - and this gave prospective LPs pause for thought.

Siguler Guff BRIC Opportunities Fund III had already been in the market for more than two years and the firm decided against waiting until the storm passed. A final close came last week on $650 million, short of the $1 billion target and also smaller than the previous BRIC fund, which closed in March 2009 on $893 million.

"We had made extensions, but when the crisis happened we didn't want to hold off any longer," Jaeger says. "With the commitments already achieved I am confident we will be in the market again soon and able to convince people that momentum continues to be strong, opportunities continue to be plentiful and performance continues to be as attractive."

Jaeger and his team have already committed nearly 100% of the co-mingled corpus to a range of GPs and co-investment opportunities. The $650 million also includes three separate accounts for large investors; once these are factored in, the fund is two thirds committed.

The expected allocation for the previous BRIC vehicle was at least 50% China, 15-20% India, 5-10% Russia and 15-20% Brazil.

While Siguler Guff is scaling back its exposure to India - local managers will receive less than 10% of Fund III - it plans to maintain a significant commitment to China. Jaeger says China has outperformed India and is on a par with Brazil and Latin America. Russia has been one of Siguler Guff's best geographies for a number of years.

The fund has also begun to embrace non-BRIC geographies, with Creador II - a primarily Indonesia- and Malaysia-focused fund - among the beneficiaries. However, it retains a mid-market sweet-spot, with an average underlying fund size of $300-400 million, and keeps a close eye on consistency across vintages.

"We are mindful of avoiding managers where you see size and strategy drift," says Jaeger. "We also want managers to be primarily motivated by carry generation rather than fees."

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• Topics
• Fundraising
• Greater China
• South Asia
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• Fundraising
• Siguler Guff & Co.
• China
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