Dyal Capital Partners Fund IV closed with a record raise of $9 billion.

Dyal Capital received a record commitment of over $9 billion for its Fund IV, with heavy oversubscription reached during the final hours. The firm is a division of Neuberger Berman and specializes in acquiring minority interests in leading institutional private market firms.

Target fund size increased

During the currency of the offer, Dyal boosted the target fund size by over $3.5 billion. This due to heavy investor interest and more investment opportunities.

The fundraising for Fund IV set a new record and put in the shade Fund III. That fund raised $5.3 billion when it closed in early 2017.

Investors in Fund IV included sovereign wealth funds, family offices, endowments, public and corporate pension plans, and foundations.

Dyal Capital’s Fund IV: Investment rationale

Private equity firms can be highly profitable entities. They earning both from fees for managing assets as well as a slice of profits from their divestitures. Fees range from 1% to 2% of assets, while profit shares can run from 20% to 30%. Buying a stake in such a firm gives Dyal (and its investors) a share of those rich pickings.

On the other hand, buyout firms are happy to deal with an investor such as Dyal to sell stakes. According to the WSJ, PE firms strengthen their balance sheets and formulate new investing strategies with the funds’ infusion from such minority capital investors.

Investing Fund IV

“Fund IV’s objective is to provide passive, minority equity capital for building balance sheet capital and enabling leading firms to invest more capital alongside their investors,” said Dyal Capital in a statement. “Ultimately, Fund IV will seek to make investments in approximately 15 private equity firms diversified by asset class, strategy, and geography.”

Dyal has already deployed 64% of its funds in 10 PE firms. That’s a telling comment on the opportunities available on Dyal’s beat.

“Aggregate commitments across all Dyal funds and co-investment vehicles now total more than $21.6 billion,” the firm said.

According to Dyal Capital, it is now the leading provider of minority equity capital to well-established private equity and hedge fund management companies.

[Related Story: U.S. Private Equity Fundraising Hits New Record   ]