NewQuest collects $1b for Asia secondaries fund

The fund launched in the first quarter of 2019 with a target of $850 million. A first close of $742.1 million came in July, according to regulatory filings, with commitments coming from the likes of New York State Common Retirement Fund. The hard cap was set at $950 million and then increased to accommodate investor demand. LPs include pension funds, sovereign wealth funds, insurance companies, endowments, financial institutions, and family offices, the firm said in a statement.

The jump in fund size comes in the wake of a change in NewQuest’s ownership structure and a broadening of its investment remit. Last year, TPG purchased a one-third interest in the firm – its first investment in the secondaries space globally – with a view to helping NewQuest address the challenges that come with adding scope and scale.

Several LPs and advisors observed at the time that TPG’s influence might be felt most keenly in fundraising. There are fewer than 20 LPs in Fund III and four account for 60% of the corpus. Being able to tap the distribution power of a global GP could change the shape of Fund IV, it was suggested.

When asked about the motivations behind the deal, NewQuest identified a different kind of expansion. The firm has already rolled out fund restructurings alongside its existing direct secondaries offering and there is a desire to target additional sub-specialties.

“We have a pretty good idea of what we want to achieve over the next 5-10 years, and without TPG, it could take us double that time,” Darren Massara, a managing partner at NewQuest, told AVCJ last year, noting that the partnership followed two years of talks. “As the secondary landscape continues to evolve, TPG’s experience in building a multi-strategy firm will be incredibly valuable to us.”

The secondaries middle-market has been characterized by greater ambition and creativity in recent years. It has featured transactions that involved rolling out single assets into new vehicles to facilitate longer holding periods, strip sales from portfolios, preferred equity structures, and renminbi-to-US dollar restructurings, as well as classic recapitalizations and tail-end restructurings.

NewQuest’s activities last year included backing a renminbi-to-US dollar deal for Loyal Valley Capital and bankrolling the formation of a fund that acquired an existing – but disparately-owned – portfolio managed by Singapore-based Basil Partners.

The latter transaction is part of a fund solutions strategy devised over the past couple of years. It focuses on complex situations, where NewQuest acquires a significant LP interest in a fund and collaborates with the incumbent GP on top of a restructuring or spin-out. In the case of Basil, the objective was to consolidate the portfolio and provide additional runway.

Meanwhile, direct transactions remain central to the firm’s approach. This involves acquiring single assets and multi-asset portfolios from investors that may be changing strategy, leaving a geographical market or returning capital to LPs to support a new fundraising process.

NewQuest was created in 2011 through a spin-out of Bank of America Merrill Lynch’s (BAML) Asia PE team. A debut fund of $400 million was primarily used to acquire 21 private equity positions from BAML. A second fund of $316 million was raised in 2014.

The firm has also announced the appointment of Nitin Agarwal as a managing director in its Mumbai office. He was previously co-head of CLSA's India private equity business. NewQuest claims to have led transactions amounting to more than $450 million in India over the last two years.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Fundraising
• Secondaries
• GPs
• Asia
• NewQuest Capital Partners
• Secondaries