Knightsbridge Advisers aims to close its third venture-secondaries fund by the end of the year as this sector gains momentum amid steep discounting and increased investor interest.
The Belmont, Massachusetts-headquartered firm has raised $117 million for its KVC Secondaries Fund III, which aims to close on a $300 million target by the fourth quarter this year, according to data from the MWRA Employees’ Retirement System.
Knightsbridge, a London-based investment firm, was founded four decades ago. It began by focusing on funds of fund and has since expanded to separately managed accounts in venture capital for primary, secondary and opportunistic investment. The firm serves institutional and individual investors. According to its website, the firm’s secondaries strategy focuses primarily on LP-led transactions and direct investments.
According to Secondaries Investor, Knightsbridge manages assets worth $3 billion.
According to MWRA data, the firm’s third secondary fund targets a net rate of return of 18% and a multiple 1.8x. The management fee is 1.25 percent during the first three-year period, and then drops to 0.625 per cent later in the investment phase.
According to Secondaries Investor, the fund’s predecessor, KVC Secondaries Fund II closed in 2021 with $255 million, compared to a target of $150 million.
In recent months, the venture secondaries market was active as investors sought out steep discounts. StepStone Group closed its sixth VC secondary fund with $3.3 billion – above its $2.6 million target. Hunter Somerville is a partner of StepStone and told affiliated title Venture Capital Journal he expected to see more buyers come off the sidelines when VC funds are marked down.
Somerville told that the supply has increased significantly over the last two or three quarters.
According to Campbell Lutyens FY2023 Secondary Market Overview, LP-led portfolios traded last year at an average discount rate of 47.8 percent. This compares with buyouts trading at 12.6% and growth equity trading at 36.5 percent.
MWRA manages approximately $690 million in closed-end funds for Water Resources Authority pensioners in Massachusetts.
Knightsbridge has not responded to a request for a comment by the deadline.