Further evidence of the continuing enthusiasm for secondary private equity investing comes with the news that Hamburg-based Blue Capital, a subsidiary of the HVB Group, Germany's second largest bank, is launching a dedicated secondary fund.
Blue Capital has launched a series of closed end funds and the fifth, the Blue Capital Equity II – Secondaries fund, will begin marketing this month (October). The firm says it is targeting completion of the fund raising by the end of Q2 of 2004 and that the fund will have an estimated life span lasting until December 2010. As with previous Blue Capital funds it will target German private clients and institutional investors.
The fund will invest in no more than four secondary transactions and reports that it has already selected two funds it will invest in: BC Partners’ European Capital VII and the Carlyle Group’s Carlyle Partners III fund. The fund is assessing secondary sales involving both both buyout and venture funds in Europe and the US as prospective investments.
As is typical with most secondary buyers, the fund says that it intends to invest only in funds that have already invested at least 50 per cent of their commitments and will therefore be between three and five years old. Most secondary buyers are keen to see the majority of a fund invested so that the likely return from the fund can be more accurately forecast.
The fund is being advised by independent Munich-based private equity fund-of-funds manager von Braun & Schreiber which was set up in October 1999 by the two founder’s of Allianz AG’s captive private equity fund-of-funds programme, Emmeram von Braun and Dr Gottfried Schreiber.