Deloitte launches fund placement unit

The latest shake-up of the private equity placement sector sees Deloitte, one of the big four accountancy groups, become the first to establish a private placement unit.

Deloitte & Touche, one of the big four accountancy firms, has confirmed that it is planning to launch a private placement fund raising unit for the private equity industry.

 

The unit will be headed by Chris Ward, head of the firm’s London corporate finance advisory team, who currently specialises in management buyouts and buy-ins. Ward has acted on nearly 100 deals with an aggregate value of over £7bn in the last 10 years, with over half of these transactions involving private equity firms.

 

Also responsible for heading the unit will be John Maxey, a senior tax partner at Deloitte also based in London at the firm’s private equity (Western Europe) team.

 

According to Maxey, the unit will initially cater to fundraisers based in Western Europe but will eventually look to assist with fund raising across the globe. “We will be providing the same service as traditional placement agents with the advantage that we have a large network of people on the ground across the globe compared with traditional service providers.”

 

Maxey also suggests that Deloitte will be able to provide services at a preferential rate to those already in existence. “We already provide a range of services to fund raising private equity firms including tax and computation services and as a result there is the scope for clients to benefit from a degree of economies of scale.”

 

The placement team, which will be based in London, is already competing for a number of undisclosed mandates. “We will initially be seeking to establish ourselves in mid-market fundraisings, although in the longer term we will be looking to take on big ticket mandates. We already deal with many of groups that invest in private equity so it will not be a cold process.”

 

With the launch of the placement team, Deloitte & Touche enters a sector that has seen considerable upheaval in 2003. Only last week, UBS confirmed that it has repositioned its global placement team to focus on US mandates, with Richard Allsopp and Jake Elmhirst relocating to the US.

 

In February, Merrill Lynch suffered a significant exodus of departures after seven placement professionals, including longstanding Merrills managing directors Ben Sullivan and William Riddle, defected to set up a placement group at Lazard. In April, Merrill Lynch filed a law suit against Lazard Freres and the group who left, charging the defectors with collusion and misappropriation of confidential information. A month later, Merrill hired five new professionals to its fund placement group, following the appointment in March of Christian Dummett, the former head of UK bank Abbey National’s private equity unit, who joined Merrill’s London office. Other departures have included Mark Schroeder from CSFB's placement group and Marty Voelker at Citigroup’s placement team, which has seen a number of people go. Both Schroeder and Voelker have joined the UBS group. 

 

Elsewhere, specialist placement advisory business MVision has set up operations in New York to complement its London-based activities with the office being headed by former New York State private equity investor Paula Chester. And London-based Helix Associates has announced the establishment of a strategic partnership with US-based placement firm Monument Group.  

 

One question the market will be asking is the size and number of mandates the Deloitte team will be pursuing. 'Large placement teams are hungry things,' commented one director of a boutique placement firm. 'They can cover a large part of the globe but they need to generate significant billings to pay their way.' The aforementioned investment banks all run placement groups of this scale. If Deloitte goes for a smaller team and smaller mandates it will be up against a number of well-regarded placement firms, as well as several seasoned individuals who devote all the energies to a few fund raisings a year. And there continue to be other new entrants to the placement business, each eager to claim a special methodology or set of contacts. All are banking on the increased appetite amongst private equity firms to get assistance from placement agents when fund raising.

 

“The fundraising market has certainly been difficult this year, with many firms struggling to raise two thirds of their initial targets,” says Maxey. “However, it is also true to say that periods like this present the best opportunity for new entrants into the market because firms require the most assistance with the fund raising process.”