Alpha Associates launches €300m FoF

Newly independent Swiss private equity firm Alpha Associates has announced the launch of its second fund of funds vehicle dedicated to Central and Eastern Europe.

Alpha Associates, the private equity firm that span out of Swiss Life Private Equity Partners on April 1 2004, has launched a €300 million ($391 million) fund of funds vehicle dedicated to Central & Eastern Europe (CEE).

The new vehicle will make primary fund commitments in the new EU member states which gained accession on May 1 2004, the second round accession countries and selective investments in Russia.

Alpha CEE 2005 will also purchase mature fund interests in the secondary market and make selective direct investments.

The new vehicle is Alpha’s second fund of funds investing in the region. It also manages 5E Holding, a structure that was launched in 1998. As at September 30 2004, 5EH had a total capitalisation including investments made and unfunded commitments of CHF148 million (€98 million; $127 million).

In an interview with Private Equity International earlier this month, CEO Peter Derendinger cited the Alpha team’s experience in the region and emphasised the fact that penetration of private equity in CEE was still very low as a percentage of overall GDP: “The market is a bit like Spain and Portugal ten years ago. It’s emerging market growth at developed market risk.”

Derendinger leads a team of 12 investment professionals at the newly formed firm, of whom ten joined him from Swiss Life Private Equity Partners in April, following Swiss Life’s decision to withdraw from the asset class.

As well as the two vehicles dedicated to CEE, Alpha also manages ALPHA 2001 LP, a small, diversified private equity partnership for institutional investors and Private Equity Holding (PEH), an evergreen vehicle listed on the Swiss exchange.

PEH almost went insolvent last year after failing to meet repayments on a loan from Swiss Life. It was saved when Credit Suisse First Boston (CSFB) bought part of the portfolio for cash, allowing it to repay the loan and leaving just €37.4 million in commitments.

Under the stewardship of Derendinger, the vehicle has been restructured with 90 percent of outstanding capital commitments reduced through the CSFB transaction. PEH has defined a new global venture portfolio strategy and made its first investment in line with the new strategy in April 2004.