BlackRock, the world’s largest asset manager, has its sights on its second long-term capital fund, BlackRock Long Term Private Capital II, six years after launching its debut fund for the strategy.
LTPC II is targeting $5 billion, according to documents prepared for the Minnesota State Board of Investment‘s 14 August board meeting. The fund is in its pre-marketing phase and the target size may change, according to a source familiar with the fundraise.
The predecessor fund, BlackRock Long Term Private Capital, raised $4.3 billion in total commitments, according to the MSBI documents. The fund initially sought $12 billion when it launched in 2018 and scaled its target down to between $4 billion and $6 billion, according to PEI data and prior reports by Private Equity International.
The first LTPC fund generated a net internal rate of return of 33 percent and a net multiple of invested capital of 2.4x for MSBI’s $950 million commitment as of 31 March, according to the documents, which noted the return figures were provided by BlackRock. It had delivered a net distributed to paid-in ratio of 0.6x as of 30 June. Other investors in the fund include State of Wyoming Treasury, Wyoming State Loan and Investment Board and Caisse de dépôt et placement du Québec, according to PEI data. MSBI recommended a $350 million re-up with BlackRock’s LTPC II fund.
BlackRock’s LTPC II fund aims to hold portfolio companies for five to eight years, a long-term strategy the firm believes will “optimise value creation and opportunities to maximise returns for investors”, according to the documents. The fund seeks to make investments of $400 million to $1 billion across eight to 12 companies.
LTPC II will have a four-year investment period and a 12-year term, with the potential of two one-year extension periods, according to the documents.
BlackRock is kicking off fundraising for LTPC II amid a recovering environment. Private equity fundraising saw a slight improvement in the first half of this year with $408.6 billion gathered across 861 final closes, according to PEI data. This is a modest increase of 9 percent from the same period a year earlier, when $374.6 billion was raised.
Though conditions appear to have improved, fundraising timelines have ballooned, with the average fund spending 18 months on the road in H1 2024 – more than double the eight months recorded in 2020.
Long-hold funds have always been something of a mixed bag among LPs, as Private Equity International has reported. For some, such as sovereign wealth funds with decades-long time horizons, parking capital with a manager for 20 years and not having to deal with fund extension requests and mountains of conflict waivers can be an attractive offer. For others, the notion of retaining assets for as much as three times the typical hold period, and often reducing or removing the ‘L’ from ‘LBO’, defeats the purpose of investing in an asset class that prides itself on having an active ownership model.
BlackRock declined to comment.
