D1 Capital Partners, a leading hedge fund managed by former Viking Global Investors CIO Dan Sundheim, is seeking to raise over $1 billion for its first dedicated private equity fund. This initiative reflects a strategic expansion for the firm, which currently manages assets totaling approximately $24.5 billion.
The new private equity vehicle represents D1's inaugural closed-end fund, emphasizing a hard close and a committed capital model. This transition indicates a formal shift beyond its existing hybrid investment strategy, which has primarily involved gaining private market exposure through side pockets within its hedge fund portfolio. Historically, D1 has blended public and private equity positions, but with this new fund, the firm is focusing on a more traditional private equity approach.
According to reports, the fund is expected to reach a final close in 2026. D1 aims to diversify its capital base and capitalize on opportunities in late-stage growth and crossover investments, which could enhance returns and broaden its investment strategy. To date, approximately 60% of D1's assets are already allocated to private investments, which include notable stakes in companies such as SpaceX, Collectors Holdings, Lineage Inc., and Ramp. D1 also previously held a position in Instacart prior to its initial public offering.
The timing of this fundraising effort appears to be influenced by D1's recent performance rebound. After experiencing a 30.5% drawdown in 2022, the firm has seen a remarkable recovery, with its public equity book up 24% year-to-date through September, buoyed by a resurgence in growth and technology-related holdings. This recovery, along with renewed liquidity in late-stage venture markets, has likely motivated D1 to pursue this significant capital raise.
If successful, the launch of this dedicated private equity fund will further blur the distinctions between hedge fund and private equity models, positioning D1 alongside peers such as Tiger Global, Coatue, and Viking in the evolving landscape of crossover investment strategies.
As D1 Capital moves forward, it will need to navigate various regulatory considerations typical in the private equity space, ensuring compliance with applicable laws and requirements as it seeks to attract investors. The successful establishment of this fund could have substantial implications for shareholders and employees alike, as it positions the firm for new growth opportunities in private markets.