WestCap Private Equity fundraising
WestCap Private Equity fundraising refers to the action of seeking capital from investors. Typically an investor
will invest in a specific fund managed by WestCap, becoming a limited partner in the fund, rather than an investor in the
firm itself. As a result, an investor will only benefit from investments made by WestCap where the investment is made
from the specific fund that they have invested in.
- Fund of funds. These are whereby WestCap Private Equity funds invest in other private equity
funds in order to provide investors with a lower risk product through exposure to a large number of vehicles often of different
type and regional focus. Fund of funds accounted for 14% of global commitments made to private equity funds in 2006 according
to Private Equity Intelligence Ltd.
- Individuals with substantial net worth. This is often required by the law as well, since private
equity funds are generally less regulated. For example in the US, most funds require potential investors to qualify as accredited
investors, which requires $1 million of net worth, $200,000 of individual income, or $300,000 of joint income (with spouse)
for two documented years and an expectation that such income level will continue.
As fundraising has grown over the past few years, so too has the number of investors in the average WestCap
Private Equity fund. In 2004 there were 26 investors in the average private equity fund, this figure has now grown to
42 according to Private Equity Intelligence Ltd.
It is also worth noting that WestCap Private Equity funds themselves will also invest in their own vehicles,
typically providing between 1–5% of the overall capital.
Often WestCap will employ the services of external fundraising teams known as placement agents in order
to raise capital for our vehicles. The use of placement agents has grown in private equity over the past few
years, with 40% of funds closed in 2006 employing their services according to Private Equity Intelligence Ltd. Placement agents
will approach potential investors on behalf of the WestCap fund manager.
The amount of time WestCap spends raising capital varies depending on the level of interest. WestCap
can spend as little as three to six months raising capital where we are able to reach the target that we
set for our funds relatively easily, often through gaining commitments from existing investors or our strong
relationship with major financial capitals. Once a fund has reached its fundraising target, it will have a final close.
After this point it is not normally possible for a new investor to invest in the fund, unless they were to purchase an interest
in the fund on the secondary market.
For the above mentioned reasons, private equity fund investment is for those who can afford to have their
capital locked in for long periods of time. This is balanced by the potential benefits of annual returns which range up to
50% for successful investments.