Cazenove unit to merge with Prelude

The London-based division of Cazenove Capital Management is to spin out from its parent and form a new group through a merger with Prelude Ventures later this year.

Cazenove Private Equity (CPE), the private equity arm of Cazenove Capital Management, is to spin out and merge with Cambridge, UK-based Prelude Ventures.
The new partnership, which is subject to approval by CPE’s limited partners and regulators, is expected to launch formally by mid-year.
The London-based team at CPE will continue to manage the New Europe Access Fund, a $410 million (€340 million) vehicle which closed in April 2000.

We sensed that our future would be better served as an independent, especially in terms of our ability to raise future funds.

Simon Cook, investment director, Cazenove Private Equity

Simon Cook, currently investment director at CPE, will be chief executive of the new company. Cook told PEO that the combined entity will have approximately £100 million (€145 million; $175 million) of cash to invest, £75 million of which will come from CPE and £25 million from Prelude Ventures.
Todd Bensen, the founding CEO of CPE, will leave Cazenove following the merger and return to the US after 20 years in London. Cook said that Bensen was leaving for personal reasons.
The existing team from Prelude, led by current managing director Bob Hook and director Alan Duncan, will continue to manage Prelude Trust plc, a quoted investment trust capitalised at around £46 million.
The new group will have a total of 17 investment professionals, working from offices in London and Cambridge.
Cook said the Prelude team has been more focused on earlier-stage venture capital investments in European technology businesses, typically investing in Series A rounds, while CPE has invested in Series B rounds and beyond. “We get hundreds of business plans that are normally too early for us that we can now pass over to the early-stage team at Prelude and they can pass opportunities back to us,” he said.

Hook: will lead Prelude’s team in the new company

Cook added that the spinout was a natural process for most ‘captive’ private equity firms. “I think most private equity funds start within corporate environments, but they inevitably tend to move away from the parents as they become defined by their team and their track record,” he said. “We sensed that our future would be better served as an independent, especially in terms of our ability to raise future funds.”
Cook said that both firms have recently closed deals, including CPE’s sale of UK email software solutions provider KVS to Veritas for $225 million in September 2004; and Prelude’s exit from UK fabless semiconductor firm Alphamosaic to Broadcom for $100 million in the same month. He added that “the new group will raise a fund in due course”.
The combined entity will have assets under management of approximately £285 million.