Apax Partners LLP said on Friday it had raised $7.5 billion for its latest global private equity fund, Apax VIII, two years after it approached investors with the goal of raising $11.8 billion (9 billion euros) from them.
While some of its European buyout peers have exceeded their fundraising targets, with Advent International Corp raising 1.5 billion euros more than its 7 billion euro target and BC Partners Ltd raising 500 million euros more than its 6 billion euro target, Apax had to contend with weaker investor demand.
Apax appeared initially to be off to a strong fundraising start. In March 2012, it told investors it had secured $4.3 billion for the fund, almost half its target, in just 10 months - the largest so-called "first close" of a private equity fund since the 2008 financial crisis.
The London-based private equity firm has since been trying to address investor concerns over fund performance as well as staff turnover. In June 2012, Reuters reported that more than half of its senior dealmakers had left over the last five years.
Apax's previous buyout fund, the 11.2 billion euro Apax Europe VII, launched in 2007, was marked at just 1.1 times its investment cost with a 2.8 per cent net internal rate of return as of the end of December 2012, according to data on the website of the Washington State Investment Board, an Apax investor.
The firm decided to cut a tenth of its investment staff and shrink its London headquarters as a result of the smaller size of its latest fund, a source familiar with matter said in March.
To be sure, fundraising within the wider private equity industry is challenging. Five years on from the 2008 financial crisis, a clearer picture of fund managers that are capable of delivering returns even through a downturn is emerging in the minds of investors. Money is piling into such managers at the expense of others.
In the first quarter of this year, 129 private equity funds reached a final fundraising close like Apax, raising a total of $67 billion, compared with 203 funds that raised $79 billion in the first quarter of 2012, according to market research firm Preqin.
In April, European buyout group Permira Advisers LLP told investors it had so far only raised 2.2 billion euros for its latest fund after it announced plans in September 2011 to raise a 6.5 billion euro fund, only to lower its target later to 4 billion to 5 billion euros.
European rival Cinven Ltd also started fundraising in 2011 but managed to reach its target, announcing last week it had raised 5.3 billion euros for its latest buyout fund.
CVC Capital Partners Ltd, another London-based private equity firm, started fundraising this year, seeking 9 billion euros for its latest buyout fund and is on course to securing it.
The Apax private equity portfolio includes footwear and accessories retailer Cole Haan, North American insurance brokerage HUB International Ltd, foreign exchange provider Travelex Ltd and General Healthcare Group Ltd, Britain's largest private hospitals operator.