Baring Private Equity does not deny plans for an MBO

Will it be the latest semi-captive PE firm to win independence?

Baring Private Equity Partners, a UK-based private equity firm, is planning to buy itself out from its Dutch parent, ING Group, according to a report in the Financial News citing sources close to the company.

Baring is also considering other options, including alliances with other big investors. It is a semi-captive firm: as well as investing ING’s money it also raises and invests third party funds. It has about E2bn under management.

Baring CEO Chris Brotchie did not deny that his company could be planning such a move. Quoted in the Financial News, he praised ING’s parentage, but did not rule out “additional relationships with other deep-pocketed financial sponsors” and said: “A lot of people are looking at us”.

No-one at Baring was available to comment for this article.

The reasoning behind a Baring MBO can perhaps be seen in the context of ING’s retreat to Holland. ING has so far closed its US business and the private equity arm of its ING Barings investment banking business. The Financial News quoted an investment rival of Baring as saying there is not much Anglo-Saxon representation on the ING board, isolating London operations.

If Baring is successful, it will be the latest in a growing line of private equity firms to split from their owners. UBS Warburg is to reduce its stake in UBS Capital to 20 per cent. Mercury Private Equity, formerly a subsidiary of Merrill Lynch Investment Managers, won independence last year and is raising its first fund. And Electra Partners, which last week closed its first fund, bought itself out of the Electra Investment Trust in 1999.

Not all private equity subsidiaries are enjoying such success. Charterhouse Development Capital is thought to be struggling to free itself from HSBC, which gained control of the private equity firm nine months ago.