In a move which further highlights Abbey National’s efforts to focus on its core operations, the UK bank has reduced its exposure to alternative assets with the sale of part of its interest in Hutton Collins to US investment firm Capital Z.
Capital Z has purchased €35 million ($44 million) of Abbey's existing limited partnership interests in Hutton Collins Mezzanine Partners, the mezzanine finance fund set up in 2002 by former Morgan Grenfell bankers Graham Hutton and Matthew Collins. The transaction effectively transfers sponsorship of the fund from Abbey to Capital Z, although Abbey retains part of its investment in the fund.
Capital Z has also made a new commitment of €40 million to the fund, taking current commitments to the fund to €200 million, as well as assuming from Abbey a minority interest in certain entities involved in the management of the fund. Hutton Collins had originally aimed to raise as much as €600 million for investment in large European buyouts.
The firm has participated in four large LBOs since 2002, including the €1.9 billion buyout of Télédiffusion de France and the €1.2 billion transaction to acquire UK bookmaker Coral, both led by Charterhouse Development Capital, and last year’s Pizza Express PTP led by TDR Capital. Investors in the fund include HBOS and Northwestern Mutual Life Insurance.
Hutton said the agreement “expands and strengthens” the investor base of the fund. “Given Capital Z's extensive experience and on-going commitment to the sponsorship of independent private equity firms, we consider that Capital Z is a perfect partner for us going forward,” he added.
Capital Z is an independently-owned investment firm that manages over $4 billion in alternative assets through Capital Z Investment Partners (CZIP) and Capital Z Financial Services Partners. CZIP acts as an anchor investor and sponsor of private equity managers seeking to establish or grow institutionally credible businesses. Since 1999, CZIP has committed over $850 million to the sponsorship of 13 private equity managers in Europe, the US and Asia. The firm is headquartered in New York, with offices in London and Hong Kong.
Last month, Coller Capital agreed to buy the majority of Abbey National’s private equity assets including interests in funds run by 3i, BC Partners, ICG, Duke Street, Montagu and Warburg Pincus. The deal was valued at £300 million ($550 million; €430 million).