UK-listed Caledonia Investments has announced that it is to take a minority stake in private equity and venture capital portfolio manager Nova Capital.
Financial details of the transaction have not been disclosed, although Caledonia Investments typically makes investments of between £10m and £25m. Caledonia Investments says it is aiming to manage a portfolio of around 30 to 40 principal investments, of which at least 50 per cent should be in quoted securities or other liquid assets.
Nova was set up in June 2002 by Michael Kelly (former senior partner of Executive Interim Management) and David Williamson (former CEO of Granville Baird) together with Lord Hodgson (former Granville Baird chairman), who has become chairman of Nova.
In December, Nova announced its first deal, which will see it take over the management of Lica Development Capital, a £70m portfolio of investments, covering early or mid-stage investments in 20 UK companies. The portfolio includes publishing company Duckworth, and Planet Ice, Europe’s leading ice-rink operator.
The first deal was funded by the firm’s senior management. The firm is working on three other transactions, including one to take over the management of two UK-based technology funds, and an agreement with an unnamed bank to take over the management of one of its troubled portfolios.
“Many private equity and venture capital portfolios need a change in performance to give the investors a reasonable return,” explained Michael Kelly. “In today’s environment of low growth and unattractive exit markets, this will only be achieved by driving performance and value from the underlying assets.”
Tim Ingram, chief executive of Caledonia, said “In this environment of difficult economic and market conditions, private equity and venture capital firms are finding it difficult to realise value in their portfolios. We firmly believe that there will be significant opportunities for Nova to grow in these markets.”