• Asia represented over 10% of Fund IX commitments versus 3% for Fund VIII
• Latin American LPs also increasingly significant, especially Mexico, Colombia
• Investment to begin in 6-9 months, once Fund VIII reaches full deployment

Leaning into limited partner (LP) demand from new geographies enabled Great Hill Partners to close its ninth growth buyout fund at the USD 7bn hard cap after only five months in the market.

The investor relations team of the Boston-headquartered private equity firm, which also has an office in London, notably focused on cultivating LPs in Asia, where exposure was previously limited. “There was a meaningful expansion in Asia,” Chris Busby, a managing director at Great Hill, told Mergermarket. “Our time and energy paid off in countries like Singapore, South Korea, and Japan.”

Commitments were also secured from China, Malaysia, Taiwan, and Thailand, helping build an Asia LP roster that includes sovereign wealth funds, endowments, financial institutions, insurance companies, pensions, family offices, various gatekeepers and advisors, and high net worth individuals. The region represents over 10% of Fund IX, up from around 3% in Fund VIII.

Elsewhere, Great Hill saw strong demand out of Latin America, notably Mexico and Colombia, thanks to favorable regulatory environments. The region is fast becoming a significant source of capital for US mid-market GPs on the back of reforms like Mexico’s so-called CKD and CERPI regimes, which allows pension fund managers to allocate capital to private market strategies.

“Many pension funds in Latin America that 10-15 years ago were not able to invest are now dipping their toes in private equity,” said Busby. Family offices from the region also feature in Fund IX, which he credits to a resonance with Great Hill’s strategy of taking majority positions in companies capable of generating strong organic growth.

The re-up rate for Fund IX was around 95%. US institutional investors that have disclosed their involvement include Arkansas Teacher Retirement System, which put in USD 40m.

Great Hill appears to have worked with several placement agents. Goldman Sachs is listed in this role in a July filing with the US Securities and Exchange Commission. TransPacific Group in Hong Kong, Chile’s Larrain Vial and Picton, and Aguilla-based Magenta Capital Services are also referenced.

The clock has yet to start on Fund IX because Fund VIII – which closed in February 2022 on USD 4.65bn – has dry powder. It is about 65% committed, and Busby expects to put the remaining capital to work over the next six to nine months. Great Hill is keen to act on a strong deal pipeline as market conditions ease.

“August and September have been a period of attractive companies coming to market, including businesses that we’ve been following for several years,” Busby said.

The most recent Fund VIII investment is the acquisition of a majority stake in Blue Cloud Pediatric Surgery, a Woodlands, Texas-based operator of ambulatory surgery centers, from TPG in August. This followed an auction process run by Evercore, as previously reported by this news service.

Fund IX will not stray from Great Hill’s core sectors of software, financial services, healthcare, consumer, and business services. Targets will typically have enterprise values of USD 250m-USD 750m, with USD 1.25bn the upper end of the spectrum. The fund will make investments of between USD 100m-USD 700m in size, with LP co-investment possible in larger deals.

North American investments are expected to account for the bulk of the corpus, with the remainder deployed in Europe. Great Hill has been active in Europe for years but opening a London office in 2023 means it sees more deal flow, according to Busby.

Activity in Europe over the past 18 months includes the acquisition of Peter Park System, a German digital parking software business, and supporting a merger of UK-based health and wellbeing benefits provider Vivup and global benefits and reward platform Perkbox. Great Hill took a majority stake in the combined business.

In terms of realizations, the firm still holds positions in Funds V, VI and VII, as well as Fund VIII, according to Mergermarket data. Last year, it sold a stake in guest engagement software business Paytronix to UK-based Access Group and then followed up by exiting e-commerce business BlueSnap to payment technology provider Payroc.

Great Hill first backed BlueSnap in 2014 alongside Parthenon Capital, which is also an investor in Payroc. As previously reported by Mergermarket, BlueSnap was prepping for an IPO in 2002, but ultimately this was shelved due to stock market volatility.

Great Hill – which sold a stake in itself to Blackstone four years ago – has returned approximately USD 7bn to investors since 2020. The focus has been on traditional exits; there are no plans to pursue liquidity via the GP-led secondary route.

“It’s good old-fashioned private equity,” said Busby. “We’re building companies that will be attractive to strategics as well as financial sponsors, and we have not taken advantage of continuation vehicles or NAV [net asset value] loans.”