UK-based buyout firm Charterhouse Development Capital has held a second close for its latest fund, Charterhouse Capital Partners VII, at over E2bn – the largest amount raised by a European private equity fund launched in 2002.
'We're delighted,' said chief executive Gordon Bonnyman, who leads the team of 19 investement professionals at the firm. 'Around 25 per cent of the funds raised comes from new investors with the rest coming from longstanding partners of ours,' he added. The fund had a first close in August last year at E1.4bn and the aim is to hold a final close in April of this year with a target total of around E3bn.
Around 50 per cent of the capital committed came from US-based investors with the other half coming from investors in Europe, the Middle East and Asia. Bonnyman and the fund raising team have been assisted by the placement agent group at Salomon Smith Barney led by Loren Boston.
Bonnyman has no illusions about how difficult the current fund raising environment is. 'The collapse in public equity market valuations has left many investors with misaligned allocations and this has left them unable to commit to new [private equity] funds.'
There also remains a number of significant competitors for investment capital. Charterhouse was just one of several major buyout groups who were looking to raise multi-billion funds in 2002: Guy Hands' Terra Firma remains in the market after holding a first close in November last year at E1bn. Nordic Capital has also been on the road looking to raise a E2bn target total fund and Doughty Hanson soft-launched a new fund amid rumours that stalled exits would make the task especially difficult for them.
In August 2002 Charterhouse grabbed the headlines by acquiring Coral Eurobet, the UK bookmaker, for £860m in a secondary purchase from Morgan Grenfell Private Equity who bought the business from Ladbroke Group for £390m. In the same month the firm also played a lead role in the E1.9bn takeover of TDF from France Telecom.
Charterhouse buys established, substantial unquoted businesses, generally preferring to be the majority investor. The transactions where the firm invests typically have a total funding requirement, either on acquisition or following planned acquisition or capital investment programme, of between £250 million and £1.5bn. The group tends to focus on investing in certain industrial sectors where it has prior expertise. Examples of favouted sectors include chemicals (Ineos Acrylics), leisure (The Tussauds Group) and engineering (UBI).
PrivateEquityOnline interviewed Gordon Bonnyman last year in a wide-ranging session that saw him talk about the nature of buyouts today, the markets that interest him in Europe and what it takes to be a successful buyout investor. Use the link next to this story to view this video.