August trust commits £15m to Parallel

London-based private equity firm August Equity’s investment trust has made a £15m commitment to a fund managed by Parallel Private Equity - rising to a possible £30m.

Kleinwort Capital Trust (KCT), an investment trust managed by private equity firm August Equity, has made a £15 million (€21.5 million; $26 million) commitment to a Parallel Private Equity fund.
 
KCT will make a £15 million commitment to Parallel Ventures Limited Partnership, to be drawn down over a period of one year, with a further commitment of £15 million expected in 2007.
 

This agreement allows our investment trust to manage surplus cash flows in a more diversified way.

Andrew Hartley, managing director, Kleinwort Capital Trust

Established in 1997 by chairman and chief executive Paul Whitney, formerly of 3i and Cinven, Parallel Private Equity was initially set up as a private equity portfolio for AXA Sun Life Group before being bought out by Whitney.
 
Parallel co-invests alongside European private equity firms, including 3i and Barclays Private Equity, in mid-market deals. To date, the firm has invested more than £1 billion in over 160 deals. 
 
Andrew Hartley, managing director of KCT, told PEO that Parallel’s focus on deal selection rather than generation was a key attraction for August Equity. “They have a quasi-discretionary investment agreement and so have a certain amount of selection over which investments they choose and no other fund of funds offers that,” he said.
 
“They also have annual vintages, which makes it more flexible, and we’ve known Paul for some time and rate him very highly. This agreement allows our investment trust to manage surplus cash flows in a more diversified way.”
 

Hartley: reviewing KCT’s strategy

In addition to Whitney, John Mackie and Barry Dean, both on the board of KCT, are a director of Parallel Private Equity and a member of the firm’s investment advisory committee, respectively.
 
Hartley added that the trust is currently reviewing its strategy and will announce the outcome in due course. “The trust is in the same position almost all private equity trusts are facing at the top of an M&A cycle when the market is very liquid,” he said. “Like 3i and Candover, there is surplus cash that can’t be invested fast enough, so cash needs to be returned one way or another and the board is currently considering its options.”