Recent liquidity events related to portfolio companies in which PIF invests through its private equity holdings
Potential benefits of secondaries
A key benefit of a private equity strategy focused on secondary offerings is its potential to provide an enhanced liquidity profile compared to a primary-focused strategy. Because secondary investors enter after the investment period is complete, the underlying portfolio is much closer to the point of realization. This typically allows investors to mitigate the J-curve and shorten the duration of their investment.
Pomona enhanced liquidity
Pomona typically purchases seasoned funds well into their 10-year life cycle whose commitments are 70–90% called. Pomona Capital manages the Pomona Investment Fund (PIF) portfolio to receive cash distributions as the more mature assets are realized, while also adding younger assets to the portfolio that are expected to enter the growth phase. This maturity profile has led to an enhanced liquidity profile and, in our view, puts PIF in a strong position to comfortably meet its outstanding commitments and to nimbly respond to new investment opportunities.
31% Average annual portfolio liquidity1, 2 (as % of NAV)
9.2% Annual distribution3 to shareholders (as % of NAV)
Notable liquidity events
Below is a list of articles that discuss recent liquidity events related to portfolio companies in which PIF invests through its private equity holdings.4 For more information, please refer to the links associated with each headline.
Accela, the trusted provider of cloud solutions at the heart of government, announced a strategic growth investment from Francisco Partners, a leading global investment firm that specializes in partnering with technology businesses. Berkshire Partners will remain a significant investor with an equal equity holding in Accela. Serving more than 300 million citizens worldwide and delivering strong 2023 fiscal year momentum, Accela offers agencies a unified suite of cloud solutions and a single cloud-based platform to accelerate government modernization, deliver critical services and build stronger communities. Accela’s Civic Platform powers major state and local governments, streamlining the internal and residential government experience for Dallas, Texas; Seattle, Washington; the State of California; Abu Dhabi; cities and counties across Florida; and more.
GTCR, a leading private equity firm, announced that it has signed a definitive agreement to acquire Once For All, a leading compliance and supply chain management software provider, from Warburg Pincus. Founded in 1998 and headquartered in Basingstoke, United Kingdom and Paris, France, Once For All is a compliance and supply chain management software platform serving the construction industry primarily in the United Kingdom and France. Once For All serves as a SaaS-based network of over 150,000 construction and facilities management companies, enabling contractors and property owners to manage their supply chain of sub-contractors and ensure compliance with an increasingly complex set of public regulations and private standards. Once For All’s software suite also includes a two-sided marketplace that connects contractors and property owners with qualified suppliers looking to source new business opportunities.
Brillio, a leading digital transformation services and solutions provider, announced a significant milestone in its growth journey with the addition of The Orogen Group as a strategic investor. Founded in 2014, Brillio is the partner of choice for many Fortune 1000 companies and among the fastest-growing digital technology service providers. Bain Capital Private Equity, which acquired a stake in the company in 2019, will continue to be a strategic investor and support the company’s next growth chapter. Over the last four years, Brillio has grown at an industry-leading rate, made four strategic acquisitions, and invested significantly in product innovation, customer service and go-to-market strategy.
Focus Financial Partners Inc., a leading partnership of independent, fiduciary wealth management firms Clayton, Dubilier & Rice, LLC (CD&R) and Stone Point Capital LLC announced that they have completed the previously announced acquisition of Focus by funds affiliated with CD&R and Stone Point in an all-cash transaction for an enterprise value in excess of $7 billion.
Fidelis Insurance is testing the limits of the tentative U.S. IPO recovery by launching a US$323 million NYSE offering with a bold corporate structure that splits the Bermuda-based reinsurer’s balance sheet from its underwriting function. JP Morgan, Barclays and Jefferies are leading the sale of 5.7 million new shares and 11.3 million shares from selling shareholders, including Crestview Partners, CVC Capital Partners, Goldman Sachs’ investments unit and the Abu Dhabi Investment Authority. The sponsors also hold stakes in the MGU platform.
A note about risk
Discussed below are the investments generally made by Investment Funds and the principal risks that the Adviser and the Fund believe are associated with those investments and with direct investments in operating companies. These risks will, in turn, have an effect on the Fund. In response to adverse market, economic or political conditions, the Fund may invest in investment grade fixed income securities, money market instruments and affiliated or unaffiliated money market funds or may hold cash or cash equivalents for liquidity or defensive purposes, pending investment in longer-term opportunities. In addition, the Fund may also make these types of investments pending the investment of assets in Investment Funds and Co-Investment Opportunities or to maintain the liquidity necessary to effect repurchases of Shares. When the Fund takes a defensive position or otherwise makes these types of investments, it may not achieve its investment objective.
The value of the Fund’s total net assets is expected to fluctuate in response to fluctuations in the value of the Investment Funds, direct investments and other assets in which the Fund invests. An investment in the Fund involves a high degree of risk, including the risk that the Shareholder’s entire investment may be lost. The Fund’s performance depends upon the Adviser’s selection of Investment Funds and direct investments in operating companies, the allocation of offering proceeds thereto, and the performance of the Investment Funds, direct investments, and other assets. The Investment Funds’ investment activities and investments in operating companies involve the risks associated with private equity investments generally. Risks include adverse changes in national or international economic conditions, adverse local market conditions, the financial conditions of portfolio companies, changes in the availability or terms of financing, changes in interest rates, exchange rates, corporate tax rates and other operating expenses, environmental laws and regulations, and other governmental rules and fiscal policies, energy prices, changes in the relative popularity of certain industries or the availability of purchasers to acquire companies, and dependence on cash flow, as well as acts of God, uninsurable losses, war, terrorism, earthquakes, hurricanes or floods and other factors which are beyond the control of the Fund or the Investment Funds. Unexpected volatility or lack of liquidity, such as the general market conditions that prevailed in 2008, could impair the Fund’s performance and result in its suffering losses. The value of the Fund’s total net assets is expected to fluctuate. To the extent that the Fund’s portfolio is concentrated in securities of a single issuer or issuers in a single sector, the investment risk may be increased. The Fund’s or an Investment Fund’s use of leverage is likely to cause the Fund’s average net assets to appreciate or depreciate at a greater rate than if leverage were not used.
The Fund is a non-diversified, closed-end management investment company with limited performance history that a Shareholder can use to evaluate the Fund’s investment performance. The Fund may be unable to raise substantial capital, which could result in the Fund being unable to structure its investment portfolio as anticipated, and the returns achieved on these investments may be reduced as a result of allocating all of the Fund’s expenses over a smaller asset base. The initial operating expenses for a new fund, including start-up costs, which may be significant, may be higher than the expenses of an established fund. The Investment Funds may, in some cases, be newly organized with limited operating histories upon which to evaluate their performance. As such, the ability of the Adviser to evaluate past performance or to validate the investment strategies of such Investment Funds will be limited. In addition, the Adviser has not previously managed the assets of a closed-end registered investment company.
Closed-End Fund; Liquidity Risks. The Fund is a non-diversified closed-end management investment company designed principally for long-term investors and is not intended to be a trading vehicle. An investor should not invest in the Fund if the investor needs a liquid investment. Closed-end funds differ from open-end management investment companies (commonly known as mutual funds) in that investors in a closed-end fund do not have the right to redeem their shares on a daily basis at a price based on net asset value.