General Atlantic, a growth investor that made early bets on Alibaba Group Holding Ltd. and Priceline.com LLC, has collected $3 billion for a fund that gives the firm more time and money to develop four companies it has backed.
The new pool includes up to $1 billion to support follow-on investments in the four companies: reinsurance intermediary Howden Group Holdings Ltd.; commodities market research provider Argus Media Ltd.; Mexican pharmaceutical company Laboratorios Sanfer; and online marketing services company Red Ventures.
“We’ve always asked, there must be a better way for us to continue holding our best investments for a very, very long period of time,” said Bill Ford, General Atlantic’s chairman and chief executive. “With the development of this new source of capital, we may have found a very powerful tool for our investors.”
General Atlantic is relying on a fast-growing tool in the market for secondhand private-equity assets, which is often referred to as a continuation fund. Firms raise capital for continuation funds to acquire assets they manage through older funds but that they aren’t ready to sell outright. Investors in the older funds can opt to cash out or roll their stakes into the newly formed continuation fund, which typically attracts money from private investment firms and other institutional investors.
Paris-based private-equity firm Ardian and Boston-based alternatives asset manager HarbourVest Partners LLC co-led the formation of General Atlantic’s continuation fund, with additional capital from the Canada Pension Plan Investment Board and Swiss private-equity firm Partners Group AG .