Deutsche Bank AG (DBK)’s private-equity group is seeking $1 billion for its next fund that will buy investors’ stakes in private-equity funds, according to two people familiar with the situation.
DB Secondary Opportunities Fund III LP, which the firm is raising just less than a year after closing its predecessor, will purchase stakes at a discount in funds that have already invested a substantial amount of capital, said the people, who asked not to be identified because the information is private. The prior fund raised $614 million last year.
Deutsche Bank joins a number of private-equity investors in raising bigger secondary vehicles as pensions and financial institutions divest buyout fund stakes at a record pace. Lexington Partners is seeking $8 billion for its latest secondary fund, 13 percent more than the prior fund raised, said a person familiar with that firm. Strategic Partners Fund Solutions, owned by Blackstone Group LP (BX), is targeting $3.5 billion for its next secondaries fund, more than the $2.9 billion gathered by the predecessor, according to a marketing e-mail.
Officials for Deutsche Bank, Lexington Partners and Blackstone declined to comment on the fundraising.
Sales of private-equity fund stakes rose to a record $27.5 billion in 2013, from $25 billion the year before, according to Cogent Partners, which advises on secondary deals. Pension plans are turning to the secondary market to cut down on the number of managers they invest with, while banks are under regulatory pressure to shed private-equity investments.
Carlo Pirzio-Biroli and Charles Smith lead the global secondary team at DB Private Equity. The unit, which has invested in alternatives since 1991, manages more than $10 billion in client commitments, according to the firm’s website. It offers primary fund-of-funds, secondaries, co-investments and separate accounts.