Partners Group raises $7b for direct PE deals

LP participation included a global spread of new and existing backers, including public and corporate pension plans, sovereign wealth funds, insurance companies, endowments and foundations. Partners Group employees, together with affiliates of the firm, will make commitments representing at least 5% of the vehicle.

Partners Group Direct Equity 2016 will target mid-market and select large-cap companies globally across sectors including healthcare, education, business services, information technology, industrials, and consumer. This mandate is in line with that of the fund’s predecessor, which closed at EUR1.5 billion in early 2014 and has a net IRR of 23.9%.

"In a sluggish macroeconomic environment, we are concentrating our efforts on specific market niches that are experiencing above-average growth,” David Layton, partner and head of PE at Partners Group, said in a statement. “Within these pockets of growth, we look for companies with recurring revenue streams and highly visible cash flows, which are not only well positioned to perform during a variety of economic scenarios but show significant upside potential and a clear path to value creation."

Investment themes will include the rise of outsourcing in healthcare and information technology, the digitalization of business services and consumer companies, and the emergence of new business models in consumer services and social infrastructure. Value-add efforts will be implemented by a dedicated operations team, which the firm claims is currently involved in more than 160 separate projects across its broader global portfolio.

The new fund has already participated in a number of transactions including the acquisition last year of India’s Aavas Financiers alongside Kedaara Capital. The company provides affordable housing loans to low and medium income people in rural and semi-urban areas.

Other recent direct PE investment by Partners includes undisclosed commitments to China’s Green Tea Restaurant and Philippines-based business process outsourcing company SPi Global. Last year, the firm announced two renewable energy deals, with a $200 million committed to a solar portfolio in Taiwan and A$250 million ($200 million) to a wind energy installation in Australia.

Partners Group claims about EUR57 billion in assets under management across private equity, private real estate, private infrastructure and private debt. Its existing direct private equity portfolio has recorded annual growth rates of 15% in revenue and 19% in EBITDA since 2014.

The firm opened its first Asia office in Singapore in 2004, and now operates out of bases in China, India, Japan, South Korea and Australia.

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