New US signing for Australian Funds Marketing

Australian Funds Marketing (AFM) has picked up its fourth overseas fund manager to represent in Australia.

The latest signing is US private equity fund specialist Peppertree Partners, which was formed in 2000.

Peppertree has launched three private investment funds in the US and intends to make the fourth fund, which will be launched next year, available in Australia for wholesale investors.

It has raised US$125 million in its first two funds and is currently looking for US$100 million for its third offering.

AFM director Paul Pickering said investors usually like to meet a new manager a few times before investing.

“We will be introducing Peppertree to Australia next month and private equity funds are creating a lot of interest at the present,” he said.

“Although the manager’s third fund is still open, we suspect most investors will wait until after these presentations on the fourth fund before making any investment decisions.”

Peppertree invests in between 10 to 20 externally managed private equity funds, including well-known names such as Berkshire, Bain and Summit Partners. The investment criteria for these funds are either venture capital or buyout.

Pickering said the fourth fund will target managers with net returns in excess of 20 per cent and is designed to give top quartile returns.

The aim is to raise US$150 million in the new fund and the minimum investment will be US$1 million.

The life of the fund is expected to be 12 years and management fees will vary between 0.15 per cent and 0.6 per cent.

The investment mix in the new fund will be 80 per cent US equity firms and the remainder in European investors, Pickering said.

“The key to the fund is the relationships Peppertree has built with these firms during the creation of the three previous funds,” he says.

“That is why people will look at a new player in the private equity market in Australia.”

Pickering said the interest expressed at meeting the new manager next month has been strong.

“I have been surprised at the high level of interest shown by the institutions, confirming this as a sector that will continue to see larger asset allocations by them in the future,” he said.