Stretch that fund
Limited partners are increasingly keen to co-invest. What are the issues, and are Europe’s general partners making enough of the benefits that direct LP co-investment can deliver?
Why is it that LP co-investment is one of the most talked-about but less often acted upon mechanisms in the private equity investment process?
One answer is that many of today’s active funds were raised during the boom times of a few years ago and are of sufficient size that they simply do not see the need for assistance from third parties in providing equity capital. But this overlooks the fact that most funds have a limit on the percentage of the fund that can be invested in any one deal (known as the ‘diversification limit’ and normally set at around 15 per cent). This is a sensible measure designed to ensure diversification of risk and is the main reason why many of Europe’s largest private equity deals in recent times have involved syndicates – sometimes including participation from LPs.
In addition, some firms may choose a collaborative approach without necessarily being forced to by the fund’s constitution. If the deal is in a sector considered inherently risky for example, the GP may deliberately set a conservative limit on its own equity commitment and encourage other investors to share the risk. In this regard, club deals involving a team of private equity groups provide a useful hedge as well as beneficial cross-fertilisation of knowledge, contacts and relationships. Whether you want an LP to be part of your hedging strategy – and accepting that most LPs’ ability to be additive in the transaction process is limited – is a moot point.
Probably the major obstacle to LP co-investment is a simple resource issue. Few such institutions have dedicated staff able to analyse an investment opportunity and make the decision about whether to invest with sufficient speed to meet the timeframe specified by the GP. Says one leading London-based placement agent: “Sometimes the GP offers the LP a deal and the LP says ‘sorry, I’m busy making a few fund investment decisions at the moment, can you come back in a month’s time?’ The answer is invariably no.”
Ultimate bonding experience
One of the benefits of LP co-investment is a simple cost issue – here is an opportunity to participate in deals sourced and executed by your GP where there is no management fee or carry, although such agreements are reached on a bespoke basis and may involve monitoring and transaction fees (other investors in the fund, which may not necessarily have co-investment rights, would probably baulk at the idea of a co-investor not sharing the costs incurred by the entire fund).
Another key attraction for both the GP and LP is the soft but not to be underestimated issue of relationship building. For the LP, co-investment provides an unprecedented opportunity to understand the way a GP works as it will have access to such things as investment documents, the due diligence process and meetings with the investee management team. This familiarity with the deal execution process may also help to engender greater trust in the GP and make the investor more inclined to back its future fundraising efforts.
There are potential drawbacks with co-investment. The GP has to bear in mind its primary fiduciary responsibility to all its fund investors and not be drawn into a potential conflict of interest between those who do, and those who do not, have co-investment rights. Such a conflict may arise, for example, where an investment has not breached the diversification limit referred to earlier, but the GP has nonetheless chosen to bring a coinvestor into the deal. If the deal is subsequently a flyaway success, investors without co-investment rights may well question why the fund as a whole only took a piece of the transaction rather than maximise its commitment.
Doughty’s call for LP equity
Co-investors also have to consider their status as minority shareholders in a deal. In a transaction where a syndicate participant does not have a strong relationship with the firm leading the deal, it will wish to incorporate into the terms of the transaction a number of terms designed to protect its position as a minority. The LP co-investor is faced here with the dilemma of how much faith to place in its GP. Of course, any action on the part of the GP that compromised its relationship with the LP could be highly counter-productive. Nonetheless, an LP would be brave to enter a deal without any minority protection at all.
Despite these complications, LP co-investment is increasing. For example, €20m to €25m of the €120m of equity invested in Doughty Hanson’s recent €390m takeover of French battery maker Saft has been set aside for LPs. When GPs want access to a chunk of additional equity capital, the ability to call on receptive LPs with a dedicated co-investment resource – Hermes is one name frequently mentioned in this context – can be priceless. As the headlines on PEO confirm, there are very large deals to be done at present. Given that debt financing can be stretched only so far, your coinvestors could prove vital – and the duration and reach of your fund will be extended as well.
Deals & Exits
MidOcean sells UK Center Parcs for £285m
MidOcean Partners has made a further exit from the €1.5bn portfolio it acquired from Deutsche Bank in February with the sale of the UK operations of Center Parcs for £285m.
MidOcean has sold the business to Arbor Plc, an acquisition vehicle set up by Collins Stewart, the UK stock broker. Arbor will be listed on the Alternative Investment Market in a fully underwritten placement by Collins Stewart. Arbor will be renamed Center Parcs UK Group plc when it lists in mid-December.
Graham Clempson, European managing partner of MidOcean, said the sale was ‘a great outcome for the company and [MidOcean’s] investors.‘ “The IPO of Center Parcs reflects the success of management and our team in improving operating performance and capital efficiency in this unique business.”
Merrill Lynch advised MidOcean on the sale.
Chequers agrees Eurofarad acquisition
Chequers Capital, the French private equity firm that grew out of the French buyout team at Charterhouse SA, has agreed to acquire Eurofarad, the French hightechnology components manufacturer in a deal worth €100m.
Chequers reached agreement with the two family owners of Eurofarad in late November. The firm is backing management at the business, which manufactures capacitors, filters and potentiometers for the aerospace, medical and defence industries.
The deal is subject to approval by the French anti-trust authorities, which are expected to review the transaction before the end of the year. Chequers Capital said it was not permitted to disclose further details of the transaction until the deal is approved.
IPO setback for EQT
Swedish private equity house EQT Partners has abandoned plans for an IPO of portfolio company Dometic, citing insufficient investor appetite for the offering. The issue was priced in the SKr190 to SKr240 price range, giving the business a valuation of up to SKr7.4bn (€820m).
EQT said that although the shares on offer were fully subscribed within the price range, ‘demand from IPO investors was not found to be sufficient to ensure a successful post-IPO market for the shares.’
Dometic, which makes fridges and air conditioning units for boats and caravans posted sales of SKr6.4bn (€711m) last year and an EBITDA margin of 15 per cent. “In a[n IPO] market like this, there needs to be extra strong demand or the company could suffer,” added Hakan Johansson, a partner at the firm. “The price range was reasonable, and allowed for a substantial discount to the company’s peers in the Nordic engineering market. If there is not sufficient appetite for a business like Dometic, the market is not ready.”
3i buys Irish newspaper titles
UK-listed private equity firm 3i has led a buyout of a group of Irish regional newspapers from Trinity Mirror in a deal worth £46.3m. 3i has joined forces with David Montgomery, former chief executive of the Mirror Group, in its bid for the titles, which were put up for sale in July.
HMTF’s Premier Foods buys Unilever unit
Premier Foods, the UK food brands business owned by US private equity house Hicks Muse Tate & Furst (HMTF), has made the latest in a series of bolt-on acquisitions. The group has agreed to acquire a number of brands from Unilever, the Anglo-Dutch consumer goods conglomerate.
The deal, reportedly worth €105m, sees the Ambrosia and Brown & Polson units move to Premier Foods. The brands generated combined sales of approximately £60m in 2002.
Hicks Muse also announced the acquisition of UK breakfast cereal manufacturer Weetabix in a privatisation that values the company at approximately £642m.
“We are delighted with the opportunity to acquire Weetabix,” Lyndon Lea, a partner in Hicks Muse’s London office, said in the statement. “We are keen to support the continued development of these iconic brands, respecting their heritage and enabling Weetabix and its employees to thrive under our ownership.”
Permira sells TFL, Sirona
European buyout firm Permira has made a speedy exit from its investment in TFL Holding, a German-based leather chemicals business acquired in 2001.
Odewald & Compagnie, the German private equity house, has agreed to pay more than €200m for the business, according to sources close to the transaction.
Permira, formerly Schroder Ventures, backed a €170m management buyout of the business in March 2001. The deal, sourced out of the firm’s Milan office, was backed with acquisition finance arranged by Intesa BCI and was made from the €3.5bn Permira Europe II fund.
“The management team, in a very short period of time, has expanded the product range and geographic reach of [TFL],” said Nicola Volpi, partner at Permira. “[It] has achieved enhanced profitability through organic means, strategic acquisitions in Italy, US and India and the start-up of a green-field factory in China.” The firm declined to reveal IRR and multiples on investment.
Sirona Group, the leading global manufacturer of dental equipment for dental practices and laboratories, has been acquired from Permira by Stockholm-based EQT.
The deal is subject to bank documentation being signed, which means that the identity of debt providers and their contribution to the deal has not yet been disclosed. The management team is known to be taking a 15 per cent stake.
Sirona, formerly the dental arm of Siemens, was bought out by Permira for an undisclosed sum in 1997. The business was then split into two companies: Sirona, the industrial division, and Demedis, the dental distribution division. Demedis does not form part of the transaction and will be retained by Permira.
KKR closes DaimlerChrysler deal
Kohlberg Kravis Roberts, the US private equity house, has reached agreement with German car manufacturer DaimlerChrysler over the purchase of MTU Aero Engines, the company’s aerospace and aircraft engine maintenance business. KKR has declined to disclose the purchase price or financing arrangements for the transaction although media reports have put the price at around €1.45bn, with financing from Commerzbank, CSFB and JP Morgan.
The completion of the transaction is subject to necessary regulatory approvals, which are expected by the end of the year. It is also subject to approval by DaimlerChrysler’s Supervisory Board. Johannes Huth, managing director of KKR in London, said in a statement: “We are looking forward to working with MTU to take advantage of the many opportunities for this experienced and innovative company.” KKR declined to comment on its plans for the investment.
First deal for fundraising Royal London
Royal London Private Equity (RLPE), the UK mid-market buyout firm, has made its first investment since commencing fundraising last year, backing environmental and property services company Emprise in a £26m transaction. RLPE has contributed £7.7m of equity to the deal, backing a management team led by founder and executive chairman of Emprise, Stephen Barrett, and chief executive Howard Sharp, both of whom have invested in the deal. Debt for the transaction has been provided by The Royal Bank of Scotland.
The deal provides an exit for 3i, which backed the business in 1995. Details of 3i’s return on investment have not been disclosed.
“We plan to continue with the company’s previous successful strategy, building services and adding clients where we can,” said RLPE director Richard Caston, who joined the firm last year from Royal Bank Private Equity. “The company has an excellent track record and represents a close fit with RLPE’s stated investment criteria.”
IK achieves lucrative double
Nordic private equity firm Industri Kapital has dealt a timely boost to its fundraising efforts with two lucrative partial exits from portfolio companies Alfa Laval and Nobia.
The firm has notified its limited partners that the Industri Kapital 2000 fund has sold 10m shares in Alfa Laval, reducing the total shareholding from 26.9 per cent to 17.9 per cent. The shares were sold at SEK100 per share, generating proceeds of €109m.
Investors have been told that from the €280m originally invested in Alfa Laval in 2000, Industri Kapital has now realised €277m. The remaining stake is thought to be worth around €222m (at SEK100 per share), which would result in a total money multiple on the transaction of 1.8x and a total IRR of 24 per cent.
IK also advised its investors that the 1994 fund realised €51m from the sale of 13 per cent of Nobia, reducing its stake to 25.4 per cent. This brought the gross money multiple on the investment up to 7.3x investment cost and boosted the IRR to 39 per cent, including the €102m value of the remaining stake.
HgCapital triumphs in Boosey battle
European mid-market private equity firm HgCapital has won the race to acquire UK-listed music publisher Boosey & Hawkes after a consortium of Stirling Square and European Acquisition Capital decided against making an improved offer for the business.
HgCapital has put together a finance package worth £84m, which includes £46m of senior debt facilities provided by Barclays bank. HgCapital is investing £38m of equity. HgCapital described Boosey as “an attractive business”, which it says will benefit from private ownership “enabling it to focus on its core business activities and providing it with access to capital for both organic and acquisition-based growth.”
Investcorp buys Hilding Anders in secondary
Investcorp, the international private equity firm with offices in London, New York and Bahrain, has made its latest acquisition in Europe, buying Swedish bed manufacturer Hilding Anders for an undisclosed sum.
The sale provided Ratos with an exit gain of approximately SEK215m (€24m), generating an average annual internal rate of return (IRR) of 28 per cent. Nordic Capital has yet to disclose its return on investment.
“We have been planning to list Hilding Anders for some time and now the company is ready for the stock market,” said Ratos CEO Arne Karlsson. “At the same time, the negotiations conducted with Investcorp have resulted in a solution that creates good prospects for the company to focus on continued expansion while entailing an enhanced exit situation for the owners in terms of value.”
Candover sells Pandrol to Delachaux
Candover has sold rail track specialist Pandrol to Delachaux of France in a £165m deal subject to approval from competition authorities in the UK, France and Spain. Candover said the exit from Pandrol meant it had generated an overall return of almost double its investment in Pandrol and two other businesses originally owned by Charter plc. In 2002, Pandrol had turnover of £111.8m and an EBITDA of £15.2m. The company, which has 663 employees, has manufacturing plants in 11 countries and sells into 98 markets around the world.
Electra backs Azelis buy-and-build
Electra Partners Europe, the European buyout firm, is to back a management buyout of Azelis, a leading European speciality chemicals distributor. Electra Partners Europe is paying €45m to acquire a 57 per cent stake from Azelis’ current institutional investors Permira, Interbanca and Centrobanca. The management led by Hans-Udo Wenzel will hold the remaining 43 per cent. The deal gives Azelis an enterprise value of €135m.
Permira, investing from its Schroder Ventures Italian fund, backed the business in 1998 as a buy-and-build, later bringing in Interbanca and Centrobanca to further finance the company’s growth. Each of the three firms has now realized its investment in the business although IRR and exit multiples have not been disclosed.
“Permira established the business in the late 1990s as a buy-and-build opportunity,” said Brian Veitch, a director at Electra’s Frankfurt office, which led the deal. “We intend to continue to develop Azelis as a pan-European business in what remains a highly fragmented market.” Electra is providing a further €40m for further acquisitions. Also in November, Electra backed a management buyout of Rank Leisure Machine Services (RLMS), one of the UK’s leading suppliers of coin operated leisure equipment, in a deal worth £30m. The business was acquired through Electra’s portfolio company Danoptra (formerly Kunick).
Alea IPO gives KKR partial exit
Alea, the Bermuda-based reinsurer backed by US private equity firm Kohlberg Kravis Roberts, was valued at £433m when it joined the London Stock Exchange in mid-November. Despite the offer price being at the bottom end of the indicative price range of 250p to 300p, the IPO will re-ignite hopes that the stock market is set to re-open as a potential source of exits for private equity firms.
Alea was formed six years ago when it acquired reinsurer Rhine Re and specialises in reinsurance and speciality insurance business lines. Its gross premiums have grown by a compound annual rate of 44 per cent since 2000 and CEO Dennis Purkiss said he expected premium rates to strengthen in the next 12 months.
ABN Amro sells Accantia to Duke Street
ABN Amro Capital, the private equity unit of Dutch bank ABN Amro, has sold its UK-based healthcare business Accantia to Duke Street Capital, the UK-based buyout firm.
Duke Street, investing from its DSC V fund, has agreed to pay £225m for the business, backed by debt facilities arranged by Bank of Scotland Corporate Banking. The firm has backed a management team led by Geoff Percy, CEO, and Peter Hatherly, finance director.
The deal came about after Duke Street Capital approached ABN Amro with an unsolicited bid for the business. “We had not embarked on a sale process and were currently in the process of re-leveraging the business,” said ABN Amro director Ian Taylor.
PPM Ventures sells Oasis for £152m
Baugur, the Icelandic retailer that acquired toy chain Hamleys earlier in the year for £59m, has bought Oasis for £152m from private equity firm PPM Ventures. The business was acquired by PPM Ventures in a £54m public-to-private buyout in 2001. The existing management team will remain in place, and will re-invest half of the £32m they received from the deal for their 12.75 per cent stake.
PPM Ventures also announced the acquisition of TJ Hughes, the UK’s discount department store operator, from JJB Sports. The transaction values the business at £56m, including the refinancing of external debt.
“With the experience and resources of PPM behind it, TJ Hughes will be able to exploit its unique position in the retail landscape,” said Gareth Whiley, director at PPM Ventures. “The concept of quality discount retailing is set for significant growth, and TJ Hughes is best placed to benefit from this, with no direct competitor in the UK and a highly capable management team.”
EI exits Stomil Stanok
Enterprise Investors, the Polish private equity house which has been operating since 1990, has completed the sale of its interest in Stomil Sanok, a Polish manufacturer of molded and extruded rubber automotive products.
The deal concludes an initial agreement announced in March, when Enterprise Investors agreed to sell its 68 per cent stake to management.
Enterprise Investors led the privatisation of Stomil Sanok in 1993, investing from The Polish American Enterprise Fund and Polish Private Equity Fund I & II. The business was subsequently listed on the Warsaw Stock Exchange in 1997, with EI retaining a majority stake.
EI said in a statement that Stomil Sanok had been one of the firm’s most successful investments in terms of return on investment. In total, the firm said the sale raised proceeds of $60m, equivalent to a 6.9 multiple on invested capital. “[The exit] concludes ten years of co-operation with the management, during which we jointly restructured the company and realised an impressive $50m investment program,” said Jacek Siwicki, managing partner of Enterprise Investors.
Funds & Buyside
GPs bowing to tougher LP demands
A study by Initiative Europe has found LPs keener than ever to ensure their interests are closely aligned with GPs. The survey found even the most established investment houses are realigning basic terms and conditions of their funds due to changing investor sentiment. The main changes have been lower management fees and moves away from deal-bydeal carry, but there has also been some pressure on transaction and abort costs.
The caution that has led to greater alignment also means investors are now conducting greatly extended due diligence when contemplating third party fund commitments. As a result, the fundraising process is now taking up to three times longer than was previously the case.
The European Fundraising Intelligence Report was based on interviews with over 50 ‘key players’ across Europe including investment houses, advisers, intermediaries and institutions.
Nordic Mezzanine caps fund at €240m
The Finnish firm has held a final close of its Nordic Mezzanine Fund II at €240m, exceeding the initial fundraising target of €200m.
The investor base consists of Nordic institutions, mainly pension funds and life assurance companies, although the firm declined to identify the LPs.
Nordic Mezzanine Fund II becomes the latest mezzanine fund to raise capital quickly – and without the use of a placement agent. “Fundraising was completed within a year,” said Vesa Suurmunne, the firm’s chief executive. “The situation is different to our debut fund, which was raised in 1999 and 2000 when mezzanine was not as well known.”
Debut fund of funds to raise €500m
ViaNova Capital, a new independent fund manager with offices in London and Zurich, has launched ViaNova European Buyout 2004, a new private equity fund of funds. The fund has a target size of €500m, and has been launched by its four managing partners:
Andrew Evans, Edward Gander, Martin Dreher and Thomas Bischoff. The fund will primarily invest in pan-European private equity buyout funds, with 30 per cent set aside for “high quality specialist or ‘rising star’ managers that focus on specific countries or regions within Europe.”
First close for BPEP’s Iberia II
Baring Private Equity Partners’ Spanish unit, BPEP España, has held a first close of its second fund, Baring Iberia II, raising €72m. The fund, which has a final close target of €100m, has secured commitments from institutional investors as well as a number of Spanish savings banks including Caja Asturias, Galician bank Caixa Nova, Caja Castilla la Mancha and Caja España.
“Four of the six investors in Fund I have returned to Fund II which is a good indication of the confidence our LPs have in us,” said José Angel Sarasa, partner at Baring Private Equity who heads the firm’s Spanish operations.
Investitori Associati targets €600m fund
Italian private equity house Investitori Associati is targeting a new €600m fund for investment in the fastgrowing Italian MBO market. If it reaches its target the fund will be €200m larger than its predecessor, Investitori Associati III, which is currently 70 per cent invested.
Founders commit €150m to new European fund
Germany’s Bayerische Landesbank, CDC Group of France and Italy’s SanPaolo IMI have each contributed €50m to the EA Partners fund, a new buyout vehicle that will invest in the European mid-market. A statement said the fund is set to raise at least €250m for its first closing, ahead of a final closing that will be capped at €500m.
“All three partners thought it was time to create a new structure as European unification develops and increasingly becomes a demanding challenge for mid-sized enterprises all over Western Europe,” said Klaus-Michel Hoeltershinken, managing director of BLB Equity Management. “So it seemed logical to set up a private equity structure which can supply pan-European partnerships between mid-sized enterprises with equity, or even originate pan-European build-ups.”
Innovacom closes Fund 5 on €120m
Innovacom, the Franco-US information technology investor, has held a second and final close of its latest fund on €120m, 20 per cent above the fund’s original target of €100m. HarbourVest and GIC (Singapore) were the main investors following the June first closing, when the firm announced commitments totaling €50m. Access Capital Partners, AGF Private Equity, CIC Finance, the European Investment Fund, the FPCR2000 (fund of funds managed by Caisse des Dépots Group), and France Telecom have also backed the fund. Limited partners outside of France represent 60 per cent of the commitments to Innovacom 5.
“We are very pleased with the fundraising,” said Denis Champenois, managing director at Innovacom. “At the beginning of the year, investors were sceptical about this part of the market. The climate for fundraising changed as the year progressed and we were obliged to say no to some investors, which would have been inconceivable at the beginning of the year.”
Swedish newcomers launch €80m retail fund
Citing a lack of private equity investment in the Nordic retail sector, newly established Swedish private equity firm Retail Private Equity (RPE) has announced the launch of its debut fund to take advantage of opportunities in the sector.
The first fund, RPE Nordic Fund 1 KB, is currently being marketed to investors and will target larger and mid-sized growth-oriented retail companies in the Nordic region. “The driving force is to look for opportunities to develop strong store concepts and brands supported by traditional financial analysis and evaluation. We expect to be actively involved with 10-12 companies in the Nordic countries,” says Nils Tunebjer, chairman of RPE in London.
Halder Gimv secures €78m for first close
The Halder Gimv Germany Fund, which was launched earlier this year by German mid-market buyout firm Halder and its controlling shareholder, Belgian private equity house Gimv, has held a first close.
The fund, launched in June with a €150m target, has so far secured commitments totalling €78m, including commitments from institutional investors in Germany, the US, the UK and Japan.
The fund will not have a specific sector focus, but will instead look to invest in family-owned companies with turnover of between €25m and €125m. “There are more than 11,000 companies operating in this sector,” says Paul De Ridder, founding partner and managing director of Halder. “Despite a lot of interest, very little has happened in this sector. We have sought to build up a level of trust with businesses and their advisors over the past twelve years which puts us in a strong position when succession issues arise.”
21 Centrale nears €125m target
21 Centrale Partners, the French private equity business owned by Italian private equity firm 21 Investimenti, is close to holding a final close of 21 Développement 2, the unit’s second fund.
The fund is expected to reach the firm’s initial target of €125m, and may raise as much as €150m. Investing institutions include the European Investment Fund, which has agreed to provide up €15m to the fund, 21 Gruppo, which provided a €25m commitment, Crédit Agricole Asset Management, MAAF, CCR Actions and Unicredito.
Schloss to quit CFSB next March
CSFB is to lose its global private equity head Larry Schloss following his decision to resign in the New Year and pursue other opportunities. The bank’s co-chief executive John Mack said in an internal memo Schloss was leaving “to explore new entrepreneurial opportunities in the private equity investment and asset management businesses” – leaving open the intriguing possibility that he may launch his own private equity fund next year.
Schloss joined CSFB in November 2000 when its merged with DLJ, where he had spent the previous 22 years, latterly as managing director and chairman of DLJ Merchant Banking Group. There is no official word yet on a possible successor to Schloss. Mack said the private equity division would continue to report to CSFB co-presidents Brady Dougan and Brian Finn.
In a separate development, Susan Schnabel has moved to become co-head of European activities at CSFB Private Equity, as the firm seeks to expand its European activities. The move is an internal one that sees Schnabel relocate to London from Los Angeles, where she was a managing director at DLJ Merchant Banking Partners, the private equity fund that became part of CSFB when it acquired DLJ in 2000. She will work alongside the previous head of Europe, Colin Taylor, who now becomes co-head.
Stenbaek leaves Danske for Keyhaven
Keyhaven Capital Partners, the recently established European fund of funds operation, has recruited Claus Stenbaek as managing director. Stenbaek becomes co-head of the team alongside existing managing director Sasha van de Water. “Stenbaek’s direct investment experience complements my own fund investment skill-set,” said van de Water.
Keyhaven, which is currently raising its first fund, says on its website that it is aiming to build relationships with about 15 to 20 primarily European buyout and venture capital fund managers. Van de Water said she could not comment on the progress of the fundraising for legal reasons.
The firm was founded earlier this year by van de Water and chairman Michael Boxford, who had previously worked together at AXA Investment Managers’ private equity fund of funds programme, where van der Water was managing director and Boxford sat on the investment committee.
Ventech names new partner
Ventech, the French venture capital firm which invests in seed and early stage companies in information technology and life sciences, has hired Philippe Bouissou as a partner. Bouissou joins the firm from Allegis Capital, a Silicon Valley-based venture capital firm with $510m under management, where he was a general partner. Previously he was a senior vice president of Matra Hachette Multimedia and in 1995 he moved to Apple Computer’s Cupertino head office. He will be based in France.
GB Palladin hires for London office
GB Palladin Capital, the private equity arm of Boston-based finance and asset management firm Gordon Brothers, has hired 30-year retail veteran Alan Taylor as a managing director in its London office. Taylor, the former chief executive of UK-based GUS Home Shopping division, will focus on European retail opportunities along with the other 12 members of the London team.
Richardson succeeds Castle at MTI
Paul Castle, who established Watford-based venture capital firm MTI in 1983, has retired and will be succeeded as chief executive by Ernie Richardson. Richardson joined MTI in 1985 having previously held senior positions in the banking and chemicals industries at British Steel, Laporte Industries and Royal Bank of Canada.
Alvarez & Marsal launches German office
Restructuring specialist Alvarez & Marsal (A&M) has opened a third European office in Frankfurt and appointed four professionals to be based there.
The office comprises four German nationals, headed by managing director Kay Michel. Prior to joining A&M, he was financial adviser to the board at Philipp Holzmann, the German engineering giant, and previously worked on the restructuring of Krone as a member of the executive board and chief financial officer.
Michel is joined by Thomas Dillenseger, who was a manager in the corporate finance and recovery practice at PricewaterhouseCoopers UK; Olaf Sachau, who was head of finance at German jet manufacturer Fairchild Dornier and was part of the A&M-led restructuring effort at the firm; and Wolfgang Felix, who was a consultant at KPMG in Berlin.
The firm set up its European headquarters in London in January 2003, headed by Antonio Alvarez III, Managing Director Europe and son of cofounder Tony Alvarez II. It also has an office in Paris.
Hermes completes its teambuilding
Simon Jennings has joined the rapidly expanding Hermes Private Equity team as a member of the fund investment division. Jennings will join a team of four, which invests in private equity funds and is headed by Gillian Brown. Swiss and UK private equity fund-of-fund groups previously employed him as an external consultant advising on investment and strategic issues. Before that he spent 14 years at UBS in various roles at UBS Capital and Phildrew Ventures as well as in leveraged finance.
Moser to join Fortress’ German operations
New-York based Fortress Investment Group announced that Matthias Moser has agreed to join the firm as managing director in January, following his departure from UK-based private equity firm Terra Firma in October. He will lead Fortress’s alternative investment expansion efforts in Germany.
Moser’s departure was one of many from Terra Firma this year. Jennifer Dunstan, also a financial managing director and another senior figure at Terra Firma’s 70-strong team, left the firm for what it described as personal reasons. Earlier this year, Mark Tagliaferri also quit. Peter Middleton, an operational managing director, resigned 18 months ago, shortly after Terra Firma had gained independence from Nomura International, the Japanese bank.
Coleman joins Deloittes placement team
James Coleman, who worked on a number of high-profile private equity fundraisings at UBS, has become the latest recruit to the new placement agent team at Deloittes. While at UBS, Coleman worked on transactions that raised a total of $14.8bn on behalf of funds such as 3i Eurofund IV, Blackstone Capital Partners IV, Candover 2001 and TVM V.
Said Chris Ward, Deloittes’ head of corporate finance advisory: “Since we launched our fundraising service in August, we have received a huge level of interest from private equity houses who feel they are not served by the current market players.”
ATP grows private equity team
Two new hires have been made at ATP PEP, the leading Danish pension fund manager. Klaus Ruhne has been brought in as vice president to work on due diligence, screening of new fund investment and coinvestment opportunities. He was previously in the M&A advisory practice at Danske Bank focusing on food and beverage deals.
In addition, Kati Ojaluoma has been hired as an analyst to work primarily on the screening of new fund opportunities. She was previously an analyst at Reuters in London and Helsinki.
ATP PEP managing partner Jens Bisgaard-Frantzen said the firm expects to make several more new hires in 2004. The team currently has 12 investment professionals in Copenhagen, who will be responsible for a €500m private equity investment programme next year.
RBS replaces French leveraged finance chief
The Royal Bank of Scotland (RBS) has appointed Pascal Werner as managing director and head of leveraged finance at the bank’s French operations. Werner replaces Michel Chabanel, who left the bank’s French leveraged finance unit in the summer to join French private equity house Pragma Capital as a senior investment partner.
Werner will report directly to Eric Mallaroni, a French national, and Euan Hamilton, heads of leveraged finance, and to Donald Bryden, country head for France at RBS. In his new role Werner will focus on the development of the Leveraged Finance franchise in France.
Werner joins RBS from Crédit Lyonnais, where he was head of acquisition finance for over five years, including responsibility for the bank’s European operations in Paris, London, Milan, Frankfurt and Madrid.
“We think we are in a good part of the market,” said Gérard Pluvinet, one of the founders of 21 Centrale. “Many French firms are raising funds to invest in majority interests and buyouts, but we have found that many companies are looking for expansion capital without having to give up a majority interest.”