BC Partners, one of Europe's oldest private equity firms, is likely to miss a fundraising target on its next flagship vehicle and has asked investors for more time to secure fresh commitments.
The London-based manager headed by Raymond Svider, which had sought at least €8.5 billion ($9.8 billion) for a new fund by August, has only pulled in around €5 billion since fundraising began at the start of 2020, according to people familiar with the matter.
Even with the closing date pushed back to January 2022, the firm expects to fall short, the people said.
It's a rare miss by a major private equity firm even as fundraising tallies soar. Private equity firms gathered about $630 billion in the first nine months of 2021, according to data from Preqin, and they're headed for a record haul as deal volumes and fund sizes are also hitting fresh highs. On average, over the past five years, fundraises took 15 months to complete and managers hit 105% of their target, Preqin data showed.
A spokesperson for BC Partners, which manages more than €33 billion, declined to comment, citing fundraising restrictions.
The timing of the fundraising launch just before COVID-19 hit proved a major hurdle as investors were focused on the management of existing portfolios, and in-person meetings were severely restricted, the people said.
BC Partners also faced difficulty convincing investors of its recent track record, as it had marked down some holdings in its latest funds to reflect the hit from COVID-19, the people said. That dragged on their performance just as potential backers were weighing whether to commit to a new vehicle, according to the people.
The performance of the firm's two most recent funds has since picked up, and BC Partners's latest credit fund is expected to hit its $1 billion target, some of the people said.
The C$227.7 billion ($180 billion) Ontario Teachers' Pension Plan, a regular investor in previous BC Partners funds, decided not to participate in the latest vehicle, the people said. The $171.5 billion Washington State Investment Board, which had participated in some previous funds, said it will also pass. The C$309 billion Caisse de Depot et Placement du Quebec is still considering whether to commit capital, the people said.
Spokespersons for the Ontario and Quebec funds declined to comment. A WSIB spokesman said in an email that the decision was not attributed to a single issue nor should it be considered an indication of future consideration toward BC Partners' offerings.
This is not the first time BC Partners has had trouble meeting its target. It took the firm about 18 months before it finally hit its €7 billion goal in 2018 for its 10th fund.
In that instance, the fund manager was helped to its target by agreeing to a so-called staple secondary deal that saw New-York based Lexington Partners buy stakes in another older fund and at the same time contribute hundreds of millions of dollars to fund 10, a person familiar with the matter said.
A spokesperson for Lexington declined to comment.
BC Partners has completed some high-profile investments and exits in recent years including IMA Industria Macchine Automatiche and Springer Nature. In July, it agreed to sell generic drugmaker Pharmathen to Partners Group Holding. BC Partners reached a deal the next month to sell a stake in CeramTec to C$519.6 billion Canada Pension Plan Investment Board, valuing the German technical ceramics maker at about €3.8 billion.
The firm missed out on some potential gains from its investment in pet retailer Chewy Inc., which it acquired via one of its portfolio companies in 2017, the people said. The stock rose over the past year to more than $110 per share but has since fallen to about $60.