Accel-KKR has consolidated its entry into the secondary market by raising its first dedicated fund to support GP-led secondary transactions.

The Menlo Park, Calif.-headquartered software specialist has raised more than $2.2 billion for AKKR Strategic Capital, according to a release. The LPs committed to the fund include some of the largest buyers in the secondary market, including Ardian, StepStone Group, Adams Street Partners and pension funds CPP investments.

The company plans to run single-asset continuation fund operations with a focus on software transactions. The fund may back both third-party continuation vehicles and its own CVs, although it will not be a lead investor in the latter.

When asked why Accel-KKR decided to raise a dedicated fund that acts as a passive LP when it is best known for its direct buyout and growth expertise, co-managing partner Tom Barnds said the strategy allows the company to access businesses that otherwise would not be accessible. will be for sale.

“We would generally prefer to buy 100 or 80 percent of a company, but the sponsor has chosen not to go that route. For us, it’s less about the opportunity of what we prefer, and more about what’s available to us,” Barnds said. Secondary investor.

“We need to look at what the capabilities of the sponsor are and what they can do with the company. We must have great confidence in the sponsor, in addition to having a very strong opinion on the attractiveness of the asset(s), he said, adding that the company will generally only invest in premier companies. plan.

Accel-KKR says it has been investing in secondary markets for more than 15 years using capital primarily from its own balance sheet. The latest fundraising is the firm’s first dedicated secondaries fund using outside capital.

The fundraising comes 10 months after Accel-KKR became the lead investor in a GP-led process involving German private equity and venture capital firm LEA Partners, as Secondary Investor reported. Accel-KKR used capital from its balance sheet and other pooled vehicles to support the transaction, a source familiar with the matter said. Secondary Investor at the time.

Accel-KKR has closed at least two CVs on its own assets: a $1.765 billion multi-asset deal last year involving its 2013 technology buyout fund and a $1.39 billion vehicle for assets in its 2008 technology buyout fund.

AKKR Strategic Capital, which closed its hard-cap, had a target of $1.5 billion. GP’s commitment, including capital from its subsidiaries, represents approximately 24 percent of AKKR Strategic Capital’s committed capital.

When asked why the secondary buyers themselves committed primary capital to the fundraising, Barnds described the relationship as a partnership in which Accel-KKR will show deal flow to these LPs and, in turn , these LPs will show the deal flow to the company.

“We are the industry specialist…we bring software specialization. We bring a lot of dealflow (and) they also bring dealflow,” he said, adding that these companies are often generalist funds that focus mainly on larger transactions.

“We are going to provide them with opportunities. They will bring us opportunities and we will help each other to determine which are the best,” he added.

Market participants increasingly expect greater sectoral specialization in the secondary market, as Secondary Investor has reported. Buyout firms known for their sector specialization, including TPG, Leonard Green & Partners and Astorg, have all raised or are in the process of raising dedicated GP-led funds to support concentrated deals.

Investors active in the specialized secondary sector do not necessarily have guarantee contracts without friction over time. Sources pointed out that a software-focused large-cap GP might not want secondary capital from another software-focused large-cap GP in its continuation fund for competitive reasons. On the other hand, a mid-sized European technology company might find the idea of ​​accepting secondary capital from a mid-sized West Coast-based technology and growth GP to be a particularly attractive opportunity.

“If I’m a GP, do I want simple passive capital from a secondary fund, or do I want slightly more active capital that comes with sector expertise and access to specialized networks? the former head of private equity at a US public pension fund said Secondary Investor This year.