Close Brothers Private Equity spins out

Close Brothers Group will not commit to the newly independent firm CBPE Capital’s next fund, which will raise around £500m.

Close Brothers Private Equity has gained its independence from UK investment banking parent Close Brothers Group. The mid-market firm, which has around €1bn under management, has spun out and rebranded as CBPE Capital.

Both CBPE Capital and Close Brothers Group declined to comment.

CBPE Capital will look to raise around £500 million (€576 million; $725 million) for its debut fund, according to a source close to the situation.

While Close Brothers Group will retain its limited partner interests in CBPE Capital’s existing funds, it will not be making any new commitments to future vehicles.

The spin-out was referenced in Close Brothers Group’s interim management statement as released in November, but both parties agreed not to publicise the separation.

One source said that the spin out represented a “natural progression and parting of ways”, refuting press speculation that suggested the split was acrimonious.

“We have reorganised our interest in the Close Brothers Private Equity partnership, which has resulted in the deconsolidation of £0.4 billion of funds under management,” Close Brothers Group said in its November interim management statement.

CBPE Capital typically invests in companies with an enterprise value of up to £100 million in six preferred sectors.

The firm’s recent deals include the exit from transatlantic chemical firm BW Water Additives, which it said earned the firm 3.5 times its original investment, and the £129 million buyout of chemical company Warwick International from The Carlyle Group-owned conglomerate Sequa.

Other firms to have spun out of banking parents include AAC Capital, the former captive of Dutch group ABN AMRO and Montagu Private Equity, originally part of HSBC.