Abbey winds down private equity unit

Staff at Abbey National’s private equity division have left the bank, fueling market speculation that a sale of its £850m portfolio might be imminent.

Abbey National Treasury Services, the wholesale banking operation of UK mortgage lender and retail bank Abbey National, is winding down its private equity investment division.

According to sources, members of the team that assembled the £850m private equity and venture capital portfolio, including Christian Dummett, has left the bank. Today a spokesman of the bank declined to comment on 'personnell matters'.   

The news is adding to market speculation that Abbey is preparing to withdraw from the private equity asset class. Earlier this month, Abbey confirmed it was considering various options for the private equity portfolio including a partial or complete sale. 

Selling the portfolio to a secondary specialist is one of the option opens to the bank at this point. However, the portfolio, which consists of around 70 individual investments in private equity and venture capital funds, is thought to be relatively young, with a large portion of the assets having been acquired at high valuations prior to the market downturn.

Secondary investors often prefer to buy mature limited partnership interest, looking for investments in funds that are between three and five years old and close to being fully invested. They also tend to be cautious when looking at recent vintages, which came under pressure when market valuations collapsed.

In a half-year results statement published earlier this week, Abbey said it had written down the value of its private equity assets by £39m, following a downward correction in the second half of last year of £5m. It also indicated that further provisions against private equity losses going forward were a possibility.