Ardian has raised $18 billion for a new fund to buy stakes in private equity funds. Reports say the European private equity manager could close the fund to new investors as soon as next month.

Ardian is one of the largest private equity firms in the world, with more than $96 billion in asset management. Like many private equity firms, they have diversified away from traditional buyout investing. It also offers private funds for real estate, infrastructure, private debt, and other asset classes.

The new ASF VIII fund will be the largest fund Ardian has raised to date.

The New Ardian Fund

The fund will look to buy interests in private equity funds that want to sell before the fund returns money to the limited partners. Secondary funds can be an excellent source of liquidity for those who want to exit early form an asset class that can keep investors funds tied up for as long as ten years. Pension managers, sovereign wealth funds, institutional firms, and high net worth investors often look to secondary funds when they decide to reallocate assets within their portfolio or need cash for some other reason.

This could be a very timely fund as the spread of the coronavirus has rocked the global economy. Companies owned by private equity funds could struggle if part of the world remained closed for an extended period. The value of the holdings will be marked down. In addition, the manager of the ASF VIII fund may be able to buy private equity units at heavily discounted prices.

That could lead to substantial outperformance when the economy and the companies within the private equity funds begin to recover. Secondary funds have always been a high performing corner of the private equity markets. A new fund awash in cash could earn dramatic returns for their investors as they put the money to work in the current environment.

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