Waterland, the Dutch mid-market buyout fund, has raised €2bn in under two months, the latest sign of a booming fundraising environment for private equity.
The firm’s seventh fund was “significantly” oversubscribed, according to Waterland’s chief executive Frank Vlayen, as large institutional investors seek yield in a low growth world.
This is the buyout group’s largest and fastest fundraising after raising €1.55bn in three months in April 2015, Mr Vlayen said.
The new fund drew large investors with 40 per cent coming from Europe, roughly the same investing out of the US and the rest from the Middle East and Asia Pacific.
The largest investor base comes from public pension funds, including the Massachusetts Pension Reserves Investment Management Board, a person familiar with the fundraising said. The US pension fund was not immediately available for comment.
Waterland has over the last two decades implemented a so-called buy-and-build investment strategy by which the firm acquires a company and subsequently purchases similar peers to create a larger group, which it then sells on.
As part of this strategy Waterland, which has recently opened offices in the UK and Denmark, has invested in 80 “platform” companies to which it has added 330 smaller companies to help them grow.
Mr Vlayen said his company, which has €6bn of assets under management, should implement the same strategy in lower and mid markets in Northern Europe, including the UK and Ireland and that it has already spotted “many attractive opportunities”.
Waterland has invested in assets like nursing homes, web hosting businesses, fitness clubs and recycling firms as part of a strategy that spots growth trends in Europe. This fund is expected to have the same investment focus.
“This fundraising is the result of the confidence from our existing and new investors given the consistency of our strategy implemented over time,” said Mr Vlayen.
MVision Private Equity Advisers were the global strategic fundraiser counsel.
It is becoming faster to raise funds in private equity with funds in 2017 closing in the first five months compared to an average of 20 months in 2013, according to Preqin, the data provider.
In the last two years private equity groups in the US and Europe have raised the largest amount of capital since before the financial crisis a decade ago.
Some notable examples include CVC Capital Partners, which raised over €16bn earlier this year, and Apollo Global Management, the US buyout fund which raised nearly $25bn, the largest ever fund of its kind.
However, this huge firing power has meant that some prices of assets have been equally pushed to record multiples as shops compete in highly aggressive auctions – raising concerns of returns coming down later on.