Doughty Hanson, a European private equity firm, has stopped fundraising for its Fund VI, the firm said today.
Doughty has been attempting to collect €2 billion for its sixth fund, which has been in market since October 2013, but has been unable to get to a first close.
“As a result of the continuing uncertainty for both employees and investors regarding the fund raising process, the decision has been taken by the board of Doughty Hanson to no longer pursue its current fund raising efforts” the firm said in a statement.
Doughty will instead concentrate on maximising the value of its remaining portfolio companies in Funds IV and V. The four companies remaining in Fund IV are Balta, KP1, TV3 and Zobele while in Fund V they are ASCO, Eurofiber, LM Wind Power and TMF Group. The firm is unable to make any new investments from Fund V, but it has approximately €300 million left for add-on acquisitions.
“Over the past three decades, we have focused consistently on taking all steps necessary to achieve strong exits for our portfolio investments and we will now be more focused than ever on achieving that ambition. Significant co-investment by the team in Funds IV and V and the prospect of carried interest as a result of strong performance, means the interests of the professionals at Doughty Hanson and our investors remain totally aligned,” Stephen Marquardt, chief executive of Doughty Hanson, said.
“We have reflected on several years of discussions with existing investors and, while today’s announcement is disappointing for those investors that have committed to the current fundraising efforts, it pre-empts further prolonged uncertainty. We will now enter into a period of review with our employees and investors to explore the possibility of another fund in the future,” he added.
The news comes after Doughty worked with HarbourVest Partners to restructure Doughty Hanson Funds IV and V. In the deal, which was revealed by PEI’s sister title Secondaries Investor, Doughty offered LPs in its €1.5 billion Fund IV and €3 billion Fund V the option to liquidate their stakes at a fixed price set by HarbourVest.
Both funds are partially liquidated and together their net asset value is more than €3 billion. Few LPs in the funds actually exercised the liquidation option, two sources familiar with the matter, said at the time.
HarbourVest paid €150 million for select stakes in the two funds, at a “modest discount” to the stakes’ net asset value. As part of the transaction HarbourVest also committed approximately €65 million to Doughty Hanson VI.
In the last three years, Doughty has returned approximately €1 billion annually to investors. It has so far netted a 5.8x return on Tumi, a 2.6x return on HellermannTyton, scored a 2.1x return on Vue Entertainment and a 2x return on Quirón. Fund V, the most recent fund, has returned almost 100 percent of invested capital to investors already, with four portfolio investments remaining.
Doughty Hanson was established by Richard Hanson and the late Nigel Doughty, who died unexpectedly in February 2012. Richard Hanson has remained chairman while Marquardt is chief executive officer.