NewQuest closes Fund III at $540m
Direct secondaries specialist NewQuest Capital Partners has reached a final close of its third fund at the hard cap of $540 million, increasing it from the original hard cap of $520 million in order to accommodate investor demand.
NewQuest Asia Fund III, which was launched in September last year, had an initial target of $500 million. The fund's first close was held in March, beating the initial target for the entire vehicle. LPs in Fund III included pension funds, sovereign funds, insurers and financial insinuations based in Asia, North America, Europe and the Middle East, NewQuest said in a release.
"With IPO markets continuing to be choppy, and trade sale markets remaining underdeveloped, NewQuest is uniquely positioned to provide tailored liquidity solutions to direct PE investors for single assets or across a portfolio of assets," said Darren Massara, managing partner of NewQuest Asia Fund. "Through Fund III, we will also be able to provide more comprehensive fund liquidity solutions, which would include liquidity solutions for limited partners as well."
The new fund will focus on minority and control transactions of $25-$75 million per company, and $50-$250 million for portfolio acquisitions. The GP also said it will participate in larger size deals backed by large institutional LPs.
NewQuest was created four years ago through the spin-out of Bank of America Merrill Lynch's (BAML) Asia private equity team. They took 21 private equity positions with them and raised a $400 million fund backed by HarbourVest Partners, Paul Capital, LGT Capital Partners and Axiom Asia.
The second fund closed in June 2014 at $316 million, exceeding the $300 million target, with around 10 LPs, including an Asian sovereign wealth fund and an Asian pension fund. Fund II is near to be fully deployed.
While virtually all of the Fund I corpus was used to acquire the BAML assets, Fund II was only partially seeded - with a portfolio bought from a China GP, and with China Hydroelectric. In the latter deal, NewQuest privatized the company after accumulating a majority stake in the business by acquiring interests from other investors. Last September, Shenzhen Energy agreed to buy China Hydroelectric for $542.6 million, paving a full exit for NewQuest and co-investor Tsing Capital.
Alongside the first close on Fund III, NewQuest announced the appointment of Daizong Wong, formerly a Beijing-based managing director at CVC Capital Partners, as a partner. Wong will be heading up the firm's Beijing office, which is set to open this summer. It also plans to expand its presence in India, with a Mumbai office opening by the end of 2016.
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