By Jason Kelly, Bloomberg
HGGC, the private equity firm co-founded by Hall of Fame quarterback Steve Young, amassed $3.2 billion for its fifth fund, exceeding its initial target despite a muted fundraising environment.
The pool had an initial target of $2.5 billion and a hard cap of $2.8 billion, which it topped through commitments from pensions, endowments, family offices and sovereign wealth funds, Young and co-founder Rich Lawson said in an interview at HGGC’s Palo Alto, California, headquarters.
Higher interest rates and lower distributions from private equity managers have crimped fundraising, which fell 11% worldwide to $490.81 billion in 2025, the second-straight year of declines, according to data from S&P Global Market Intelligence.
“You had all these geopolitical tensions, and you had this flight to quality with private equity,” said Lawson, HGGC’s chief executive officer. “The opportunity set for many investors has shifted to what we call mid-cap or middle-market businesses.”
The firm’s focus on the middle market — typically involving deals of as much as $1 billion — appealed to prospective fund backers known as limited partners during meetings around the globe.
Those backers have become more discerning and eager to invest with funds that have clear mandates rather than just broad ambitions to gather money across multiple asset classes, according to Young, who won three Super Bowl rings with the National Football League’s San Francisco 49ers.
Limited partners are “more in control than ever,” said Young, the firm’s chairman and a Pro Football Hall of Fame inductee.
On the other end, companies and especially other buyout firms are hungry to buy. The so-called dry powder available to private equity firms to put to work is “getting even drier,” McKinsey & Co. said in a report this month. It estimates that more than 40% of the dry powder ready to invest has been available for the past two years — much higher than the five-year average.
In this market, HGGC considers itself both a buyer and seller, according to Lawson.
“We’re building great businesses and great businesses are always sellable,” Young added.
The firm — which manages more than $10 billion — leaned into its ability to weather tough markets in raising the latest fund. HGGC’s third fund, raised in 2017, returned about 2.3 times investors’ money on a net basis, and the fourth fund — from 2020 — returned about 1.6 times net, according to an investor presentation seen by Bloomberg.
The funds had a net internal rate of return of 24% and 19%, respectively.
Young, 64, and Lawson, 54, said they stressed to investors their expansion of HGGC’s partnership and management as a signal of continuity. The pair in the past several years has elevated David Chung, Bill Conrad, Steven Leistner and Neil White to become managing partners of the firm.
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