FLAG buys Asian fund-of-funds Squadron Capital
Asia-focused fund-of-funds Squadron Capital has been sold to FLAG Capital Management. The acquisition will take US-based FLAG’s assets under management to $6 billion, up from $4.5 billion, and broaden its product offering across private equity, venture capital, natural resources and real estate. Terms of the deal were not disclosed.
"Squadron has one of the most experienced private equity fund-of-funds teams in Asia, and we are excited to be joining such a terrific organization," David Pierce (pictured), the Squadron CEO who will become a partner at FLAG, said in a statement. "Together we believe we can grow our combined business rapidly, benefiting from highly complementary relationships and business practices."
Squadron's team has been active in the region since 1989, having started out as Search Investment Group, the Hong Kong-based family office of Robert W. Miller, which was set up in the 1970s. Miller co-founded Duty Free Shopping, a retail chain that started at Hong Kong airport and spread worldwide. It is now co-owned by luxury group LVMH.
The team began operating under the name Squadron in 2006, when it was spun out as a subsidiary of Search Investment and started to raise capital from third-party investors. The first fund-of-funds closed in 2007 at $300 million, with Search Investment and San Francisco Employees' Retirement System (SFERS) among the LPs.
A second fund was launched in 2007 and closed three years later with total commitments of $400 million. Squadron is seeking a similar amount for its third vehicle. According to AVCJ Research, the portfolio for funds I and II includes vehicles run by Hony Capital, Avigo Capital, Archer Capital, Motilal Oswal Private Equity and Kai Capital.
In addition to running co-mingled fund-of-funds, Squadron serves as an investment manager to specific clients. In 2011, it established Keva Squadron Emerging Asia Fund I, a $150 million vehicle backed exclusively by Finnish government pension institution Keva.
FLAG was set up in 1994 and has offices in Boston, Stamford, Connecticut, and Hong Kong. Its client base includes private and public pension plans, foundations and endowments and ultra-high net worth individuals.
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