(PrivateEquityCentral.net) In its second acquisition of a telecommuncation company’s in-house venture capital group, London-based secondary specialist Coller Capital has teamed with New Venture Partners to acquire British Telecom’s in-house venture capital unit Brightstar.
All parties involved are committing $100m total to the venture, called NVP Brightstar, according to a press release. That money will be used to acquire Brightstar’s current portfolio of companies as well as future investments.
New Venture Partners, which Coller established in December 2001 through a $100m management buyout of Lucent’s New Ventures Group incubator, will oversee the portfolio and manage new investment decisions. British Telecom will maintain a 23 per cent stake in the newly created firm with Coller owning the majority stake.
Brightstar was founded in 2000 by British Telecom to develop companies based on the technology developed at BT’s research lab, BTexact. The group provided seed funding for internal start-ups, having committed approximately $55m to nine companies. Companies in Brightstar’s portfolio that will be acquired by the newly created firm include telecommunications revenue assurance company Azure, telecommuncations network design software company Evolved Networks, and wireless technology company Microwave Photonics.
“This is an exciting partnership we were able to form,” Timothy Jones, an investment director for Coller Capital, said. “We are accelerating the spin out of these companies as a portfolio solution while British Telecom keeps its stake.”
Jones added that the new venture is similar to its acquisition of Lucent’s corporate incubator. “Like Lucent, British Telecom is one of the best of breed in developing companies through its research lab,” he said.
In October, Coller Capital closed its fourth fund on $2.5bn, the largest secondary fund ever raised. The fund had an original target of $1bn. Investors in the fund include the California Public Employees’ Retirement System (CalPERS), the State of Michigan, General Motors, Barings, and the Canadian Pension Plan Investment Board. Most of the fund’s investors – 47 per cent – are from North America, with 38 per cent from Europe and 15 per cent from the rest of the world.
Coller Capital is a secondary firm based in London that specializes in the secondary buyouts of private equity portfolios and limited partnerships. In mid-1998, the firm acquired the private equity portfolio of US-based Shell Pension Trust, valued at $265m. In 2000, Coller acquired the former NatWest Bank portfolio of private equity interests, involving 292 companies, from the Royal Bank of Scotland. That transaction, which was valued at $1bn, remains the largest secondary purchase of private equity portfolios in the world to date.