Archer secures $1.5b for fifth fund

The vehicle, which counts domestic and international institutions among its investors, was significantly oversubscribed.

Archer's previous fund closed at A$1.356 billion in 2007. According to AVCJ Research, LPs include HarbourVest Partners, Pomona Australia, Squadron Capital and Vantage Asset Management. Future Fund was reported earlier this year to have committed to the new vehicle.

"The positive response from investors in such a short time-frame and difficult market conditions represents a very good result for the firm. Further it underlines there still exists a strong demand for the private equity asset class," said Peter Wiggs, the private equity firm's managing director. "For everyone at Archer Capital it is an endorsement of our track record of delivering strong and consistent returns."

Archer's success stands out at a time when many private equity firms are struggling in response to the superannuation funds scaling back commitments to the asset class. There have been reports of firms cutting management fees to win mandates and agreeing to delay levying performance fees until all the money has been returned to investors, rather than after each deal.

Some market watchers have gone so far as to suggest that local players outside the top quartile will be cut off by investors.

Archer's position is emboldened by a recent flurry of deal-making. It was one of Australian private equity's biggest spenders in 2011, investing approximately A$600 million across four transactions. Quick Service Restaurant Holdings (QSRH) - the company behind local fast-food chains Red Rooster, Oporto and Chicken Treat - was purchased from Quadrant Private Equity, whileHealthe Care, Australia's third-largest hospital group, came from CHAMP Ventures. Archer also acquired a 60% holding in V8 Supercars and DairyWest, a portfolio company, bought Brownes Foods from Fonterra.

In addition, the firm also made divestitures worth more than A$2.5 billion over the period, securing an average return of 3.2x and an IRR of over 40% from four exits.

In August, Archer and HarbourVest sold accounting software firm MYOB to Bain Capital for A$1.3 billion, nearly three times the amount invested in early 2009. Two more exits came in November. First, Archer exited sporting goods chain Rebel Group to Super Retail Group for A$610 million. The private equity firm paid A$369 million for Rebel Sport in March 2007, combining the company with its existing Amart Allsports business.

This was followed by the sale of iNova to Canada's Valeant Pharmaceuticals in a deal worth up to A$700 million. Archer and Ironbridge Capital bought the asset from 3M for A$450 million in 2006.

The fourth exit - the sale of wine distributor Cellarmasters to Woolworths for A$340 million - came in February. Archer acquired the company from Foster's Group in 2007 through a management buyout.

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