Aureos sponsors relinquish 26.5% stake to management

CDC Group and Norfund have sold part of their shareholding in Aureos Capital, a small cap private equity manager in emerging markets, to the management.

The sponsors of Aureos Capital, a private equity investor in small and medium-sized enterprises in emerging economies, have sold 26.5 percent of their combined ordinary share capital to the fund manager.

The move was prompted by the growth of Aureos, which has started to attract private investors and a new breed of investors who want to see a structure that mirrors independent private equity firms, in which “the management skin (is) in the game,” Noah Beckwith, a spokesman for Aureos said.

Sivendran Vettivetpillai, Aureos chief excutive officer said: “Aureos employees’ participation in the company’s ownership…will reinforce the alignment of interests between management and investors in Aureos Funds.”
 
The share transfer by CDC Group, the UK government’s fund-of-funds, and Norfund, a Norwegian development financial institution, is the first step toward Aureos obtaining as much as a 49 percent stake by 2008, according to a statement.

“Between 2006 and 2008, Aureos Group employees will have the option to acquire an additional 22.5 percent of the ordinary share capital of the firm, subject to the achievement of certain key performance indicators,” it said in the statement.

The change in ownership structure is accompanied by FMO, Netherlands development finance institution taking on a greater role in Aureos, as an investor of the company, as well as the funds under its management.

FMO, a longtime investor in Aureos as well as CDC private equity funds, has invested $2 million in Aureos’ preference shares, and will get two seats on its board. CDC and Norfund each have two seats.

FMO will also become a cornerstone investor, and has committed up to $100 million in Aureos funds from 2006 to 2010, according to the statement.