Private equity practitioners typically don't worry as much about currency risk as other financial types do. But after the dramatic rise of Europe's single currency, GPs are thinking a lot more about exchange rate movements and their potential impact on performance.
The Euro is, it seems, on everybody's mind. Its recent rise against the dollar has been astonishing. On the day of this issue going to press two years ago – at the end of the first month of the Euro's existence – one Euro would have bought you $0.87. A year on you would have had $1.08, and today the figure stands at $1.24.
This kind of movement in a currency's exchange rate is dramatic, and even private equity professionals have started to take notice. Private equity's long-term nature typically means that exchange rate movements tend to be considered less important. But even private equity can't ignore a shift of this magnitude.
According to a leading UK-based placement agent, some general partners have taken until Christmas to tune in to the story of the Euro's appreciation – but now it is a major talking point for them as well. The placement agent recalls recent discussions with a GP who is about to launch a Euro-denominated fund. “At first they didn't think that currency was a major issue – just one factor among many. Then we explained to them that if US investors were to match their positions in their previous fund, they would have to increase their total amount committed by 55 percent. They are certainly focusing on the issue now.”
And rightly so: European private equity fundraisers still operate by a rule of thumb that says at least half a fund's commitments will come from US investors. Their pockets are deep, their appetite for private equity remains keen, and many have come to regard Europe as private equity's promised land in recent years.
Could the Euro really change this? A partner at a London buyout firm goes as far as saying that he would be “worried” if fundraising were on the cards this year. For if US investors in a Euro denominated fund are thinking that they may be getting a bad deal now, what will they say to the prospect of the dollar falling even further by the time their commitments are being drawn down?
Of course, dollar holders who put money into European private equity at a time when the Euro was cheap can't believe their luck. Just think of those US investors that benefited from Hicks Muse Tate & Furst's investment in UK yellow pages business Yell. Hicks Muse committed cash from both its global dollar-fund and its European vehicle when investing in 2001. Two years later, when Yell floated on the London Stock Exchange, investors in the Euro-fund received a very nice return of two times capital. But those in the dollar-fund made 2.6 times their money, thanks to the currency uplift. And earlier this year, when Hicks Muse sold the remainder of its shares, the discrepancy between the two different fund holders was even wider.
However, whether Hicks Muse's US clients should reinvest these earnings into another European buyout straight away is a less straightforward question. Surely Europe has now a terribly expensive look and feel about it?
That said, recent headlines on PEO do not suggest that US buyout operators, even those investing from dollar funds, have beaten anything resembling a retreat. On the contrary, the US houses seem undeterred. Some Europeans are finding this baffling. As one [European] LP puts it: “If Europe is still attractive, even in light of the current exchange rate, I think it tells you a lot about the returns these guys are expecting in the US.”
Time will tell whether US GPs can extract value from the European investments they are making today regardless of the currency odds being stacked against them.
Another Le Meridien?
Meanwhile their European counterparts are mulling their own Euro-related concerns, even those who don't have fundraising on their mind at the moment. Alongside every other homo economicus in Europe, they fear what a strong Euro might do to US demand for European goods and services. Ask any private equity house that owns leveraged businesses with significant exposure to US markets. Some may have got their currency hedging right, but others won't, and that could turn out a nasty place to be.
Sure enough, some London-based leveraged finance professionals say there will be another Le Meridien this year. Now, buyouts of that size don't typically fall for just one reason. If a big deal collapses in 2004, blaming it all on the strength of the Euro will be too easy. But bankers are right to point out that its strength – or the dollar's weakness – is among the chief risks for the year.
Deals & Exits
Cinven doubles money on Unique sale
Enterprise Inns, one of the UK's largest pub chains, has announced that it plans to acquire the remaining stake in fellow pub operator Unique Pub Company that it does not own.
Enterprise Inns made a £75 million (€108 million; $137 million) cash investment in the initial £2.013 billion acquisition of the Unique Pub Company by a private equity consortium led by Cinven and including Morgan Stanley's Princes Gate Investors and Legal & General Ventures in March 2002. Cinven contributed £235m of equity with LGV and Princes Gate investing £60m and £77m respectively.
Enterprise Inns indicated in its AGM statement in January that it intends to exercise a call option to acquire the 83.2 percent equity stake in the Unique Pub Company currently held by a private equity consortium led by Cinven, before the end of March 2004. The consideration for the exercise of the call option is expected to be approximately £609 million.
“This has been a highly successful investment for Cinven which will result in a return of over two times our invested capital,” said Dick Munton, a director of Cinven. “When we made this investment, we knew that we were backing a management team with the ambition and experience to create significant value. The performance of the business has been excellent and is reflected in Enterprise Inns' announced intention to exercise its call option.”
JP Morgan pays £350m for IMO
JP Morgan Partners (JPMP), the private equity arm of US investment bank JP Morgan Chase, has announced its first UK investment in almost a year, agreeing to acquire London-headquartered car wash company IMO Car Wash Group.
JPMP is backing existing chief executive Bret Holden in a transaction valued at £350 million (€506 million; $642 million) with debt financing provided by Bank of Scotland.
The UK business of IMO was bought by a group of financial investors led by Bridgepoint in 1998. Phoenix Equity Partners and BNP Paribas also participated in the original buyout, which valued the business at £141 million.
Bridgepoint Capital declined to disclose its return on investment although sources close to the firm said the exit represented a money multiple of three times.
AXA buys BdW portfolio
AXA Private Equity, the private equity business of French insurance group AXA, has stepped up its acquisition of European secondary portfolio interests with the purchase of Beteiligungsgesellschaft für die deutsche Wirtschaft (BdW).
BdW, a German provider of expansion financing, LBO and venture capital, is being acquired from its former shareholders Dresdner Bank Group, AMB Generali, Protektor and Merck Finck & Co. BdW has a portfolio of over 45 participations in German companies with a balance sheet of approximately €200 million ($256 million).
AXA invested in BdW from its dedicated secondary fund, AXA Secondary Fund II, which has $480 million available for investment. AXA's secondary funds are partnered with Paul Capital Partners (PCP), a US manager also specialising in the secondary investment market.
Coller buys Abbey portfolio for £300m
British bank Abbey National has continued its disposal of non-core assets with the £300 million (€430 million; $550 million) sale of a large part of its private equity portfolio to secondaries specialist Coller Capital.
Timothy Jones, a partner at Coller Capital, said in an interview that the transaction was the largest private equity secondary transaction to date involving a single buyer. It comprises interests in 41 private equity funds and direct shareholdings in 16 private European companies, which will be transferred to Coller's $2.6 billion global secondaries fund, Coller International Partners IV.
Jones said the portfolio included positions in funds managed by 3i, BC Partners, Duke Street Capital, Intermediate Capital Group, Montagu Equity and Warburg Pincus.
Permira sells dental businesses for €255m
Henry Schein, the Nasdaqlisted healthcare distributor, has acquired Demedis and Euro Dental Holding (EDH) from Permira for €255 million ($325 million).
The sale completes Permira's exit from Sirona Group, formerly the dental arm of Germany's Siemens, which it acquired for an undisclosed sum in 1997. The Sirona industrial division was sold to Nordic private equity firm EQT for €417.5 million in November 2003 while Demedis, the dental distribution division, was retained.
Deutsche sells more property assets
Deutsche Bank Real Estate Opportunities Group (REOG), part of Deutsche Asset Management's Real Estate Group, has completed the sale of $1.2 billion (€940 million) worth of direct property investments to third party investors.
Under the deal, investors including US pension schemes CalPERS and CalSTRS have committed to a new $1.2 billion private equity real estate fund which was organised to purchase the assets. The fund, which following the purchase is fully invested from inception, will continue to be managed by REOG, now acting on behalf of the fund's limited partners.
The limited partners have also agreed to reinvest $300m of the fund's profits into a follow-on fund. The bank said one or more of its affiliates would commit up to $60m to this reinvestment vehicle.
Apax, HMTF sell remaining Yell shares
Apax Partners and Hicks Muse Tate & Furst have completed their exit from UK telephone directories business Yell, selling their remaining joint stake of 34.2 per cent of Yell's issued share capital for a total of £720 million (€1.03 billion; $1.31 billion).
Apax and Hicks Muse sold their entire holdings in Yell at a price of 303 pence per share. Both houses, which had already achieved a partial realisation at the time of Yell's IPO in July 2003, reported an overall multiple of over 2.5 times their original 2001 investment.
Private equity trio complete €729m ABB deal
ABB, the Swiss-Swedish engineering group, has sold part of its oil and gas business to Candover, 3i and JP Morgan Partners for €729 million ($925 million).
The consortium, which also includes co-investors NIB Capital, are committing €331 million of equity to the deal, with debt and mezzanine finance of approximately €519 million being provided by a syndicate of banks led by JP Morgan Chase, Bank of Scotland and Credit Suisse First Boston.
“Candover first approached ABB almost two years ago with a view to acquiring the oil and gas business as part of our strategic intent to build a significant presence in the upstream oilfield services sector,” said John Arney, a director at Candover. “We are acquiring a market-leading business with global scale, at a time when strong growth is predicted for the industry.”
LDC buys Cinven's Electrium
Lloyds Development Capital (LDC), the UK-based midmarket firm, has backed a secondary management buyout of Electrium, the electrical group based in the West Midlands.
The deal values Electrium at £38 million (€55 million; $70 million) and provides an exit for Cinven from the business it backed in 1997. The business, formerly known as Hanson Electrical, has underperformed under the stewardship of Cinven, which paid £135 million to Hanson Plc at the time of the original buyout.
In 1996, Hanson Electrical's sales amounted to £145 million and operating profits were £13.4 million. In the year to March 2003, Electrium reported turnover of £63 million. “The management of Electrium has reshaped the cost base of the business to compete profitably in its marketplace and has successfully managed the rationalisation of its manufacturing base,” said Martin Draper, a director at LDC. “As a result of their actions over the last two to three years, the business is well positioned to capitalise on the power of its brands.”
Allianz, Goldman in partial Messer exit
French industrial gases producer Air Liquide has acquired German competitor Messer Griesheim's operations in the US, Germany and the UK for €2.68 billion ($3.32 billion) in a transactions providing Messer's majority shareholders, Allianz Capital Partners (ACP) and Goldman Sachs Capital Partners, with a part-realisation of their interest in the business.
In April 2001, ACP and the Goldman Sachs Funds acquired 67 percent of Messer Griesheim from Hoechst (Aventis) in the largest European leveraged buyout at that time at over €2 billion. Since then, the owners have divested activities in Latin America, Africa and Asia to focus on the company's operations in the US and Europe. Following the divestment of the German, UK and US operations, the newly formed Messer Group will operate in 26 countries in Western and Eastern Europe, as well as in China and Peru.
A spokesperson for Allianz said that the sale to Air Liquide was the second step in the process which will eventually see both Allianz and Goldman Sachs realise their investments in Messer. The sale of the remaining business to the Messer family is not due “until mid-year”. Details of the private equity firms' return on investment are not expected until then.
CD&R's Sirva continues European rollup
Sirva, the relocation services company backed by US private equity firm Clayton, Dubilier & Rice, has made its second European acquisition in less than a year, acquiring Belgian company PRS Europe for an undisclosed sum. PRS Europe is the biggest relocation services provider in Belgium, and one of the largest in Europe, with operations across Belgium, France and The Netherlands. Financial terms of the transaction were not disclosed.
Alchemy spends €180m on CVC, Bridgepoint asset
Alchemy Partners, the UK private equity firm headed by Jon Moulton, has acquired Blagden Packaging Group, a UK-based manufacturer of industrial packaging.
The price for the business has not been disclosed, although sources close to the deal indicated that Alchemy agreed to pay €180 million ($140 million) for the business.
The transaction, which is subject to anti-trust regulatory clearance, provides Bridgepoint and CVC Capital Partners with a full exit, with both firms thought to have generated a healthy return on their initial investment. Sources said Bridgepoint doubled its money on the business acquired by the two firms for €149 million in 1998.
Alchemy is expected to make further add-on acquisitions as the industry consolidates further across Europe. Under the deal, management increases its equity interest in the company.
Funds & Buyside
Manager of CDC assets to raise $500m
CDC Capital Partners, the UK state-owned risk capital investor, has completed a restructuring that it believes will increase its ability to stimulate private sector growth in the world's poorer economies. CDC has over £1 billion (€1.4 billion; $1.8 billion) in assets.
Under the deal announced in January, CDC is split into two separate vehicles. The group's investment professionals and staff are spinning out to form Actis, a limited liability partnership in charge of managing CDC's investments as well as up to $500 million of additional capital to be raised from third party institutions over the coming years.
Actis' management are acquiring 60 percent of the entity's equity. The remaining 40 per cent of Actis' shares are retained by the UK Government. Paul Fletcher, currently CEO of CDC Group, will run the business.
CDC will retain its name and continue to operate as a wholly governmentowned investment company, holding the existing and future assets of CDC and funds affiliated with the group.
Actis will initially concentrate on investing in Africa and South Asia. A preferred sector is power, where the group invests through its emerging markets power business CDC Globeleq. It will also continue to be active as an investor in small and medium-sized enterprises. CDC already operates Aureos Capital, a joint venture with Norwegian development agency Norfund, which invests in African SMEs. Aureos manages some $50 million in third party capital.
The Department for International Development, the government body that controls CDC, was advised on the reorganisation by Campbell Lutyens, the London-based private equity corporate finance and fund placement group.
Leman postpones fundraising effort
Leman Capital, the Swiss-based private equity firm that invests in European mid-market buyouts, has postponed its latest fundraising effort.
Leman announced a first closing of its second buyout fund at €150 million ($193 million) in August 2002, with commitments from returning investors from the firm's €155 million BVP Europe I fund.
BVP Europe II aimed to extend the geographical remit of its predecessor by focusing on investments in Italy, Spain and Benelux as well as Switzerland, Germany, France and Austria.
Said Leman managing partner Auguste Betschart: “We tested out the market, but the feedback was that we hadn't achieved enough exits. We will now invest what we have got and go out to the market again in 12 to 18 months' time. At that time, we think the environment should be better and anticipate having completed two or three more exits by then.” He added that next time the firm would target between €300m and €400m.
Carlyle Europe Real Estate fund raises €430m
Global private equity firm The Carlyle Group has achieved a final close of its debut European real estate fund, having raised €430 million ($545 million).
Carlyle Europe Real Estate Partners is an opportunity fund focusing on a single asset approach and investing in offices, retail and industrial property and logistics centres in the €20 million to €80 million range.
The Carlyle Europe real estate team was established in 2001, and has already made 15 acquisitions of properties with the fund in France, Germany, Italy and the UK including Jupiter, a portfolio of 36 properties in Italy in 2003.
“We are delighted to have completed fundraising, and the team has already made excellent acquisitions and developments in Europe,” said Eric Sasson, a Carlyle managing director and head of the Europe real estate team. “I am very positive about the future property climate for us and our ability to expand our investment activities in Europe.”
Nordic funds raise record amount
Nordic private equity and venture capital firms enjoyed a record fundraising year in 2003, boosted by a number of successful campaigns by the region's leading players, according to new research.
In total, Nordic firms raised €4.5 billion ($5.7 billion), seven percent higher than the previous record at the height of the technology boom in 2000, when equity houses raised a total of €4.2 billion.
The picture was not quite so rosy for buyout activity in the region, despite a pickup in the second half of the year. Over the last two years the number of private equity-backed buyouts seen in the region has halved and the total deal value has been slashed to one-third of the 2001 figure, the research published by Initiative Europe said.
Robeco launches $200m sustainability FoF
A new private equity fund of funds aiming to capitalise on the growing area of sustainable investment has been launched by Robeco, the asset management division of Rabobank.
Robeco Sustainable Private Equity will apply sustainable investment criteria to its selection of a portfolio of private equity investments.
In a two-stage process, the fund will apply negative screening to rule out investments in weapons, fur, tobacco, alcoholic beverages, adult entertainment and gambling. The fund, which has a target size of $200 million (€158 million), has been launched with a €70 million cornerstone investment, comprising two €35 million investments from Robeco and parent organisation Rabobank.
Robeco managing partner Ad van den Ouweland, who is spearheading the fund, said: “The integration of sustainability with private equity is a unique combination. Sustainability is getting more and more attention, and both sustainability and private equity offer longterm growth.”
Close Brothers raises £50m for growth fund
Close Brothers Growth Capital (CBGC), a majorityowned subsidiary of independent UK investment bank Close Brothers Plc, has held a first closing at £50 million (€71 million; $91 million) of its second fund.
The fund has a target of £100 million, which according to Barrie Moore, a director of CBGC, the firm is hoping to reach later this year. The investors that have already committed to Fund II are the ones that also backed Fund I, which closed in 2000 – The European Investment Fund, Prudential M&G, Bank of Scotland and parent Close Brothers. Moore said another 17 international institutions were currently carrying out due diligence.
CBGC invests in UK businesses through structured instruments that combine loan characteristics such as downside protection with the potential upside of equity investments. The fund's overall return target is 25 per cent.
CBGC is being advised by Continental Capital Partners, a London-based independent private equity placement agent.
EI launches new €300m fund
A new fund with a target size of €300 million ($377 million) has been launched by Enterprise Investors, the Warsaw-based private equity firm. Speaking at a news conference, Enterprise Investors' managing partner Jacek Siwicki said: “The fund will be established in the next several weeks. About 30 percent of the fund may be invested in the [Central and Eastern European] region and the rest in Poland.”
Enterprise Investors, which claims to be the largest private equity firm in Central Europe, has around $725 million under management and has invested in 91 companies since it was formed in 1990. It currently manages Polish Enterprise Fund IV, the Polish Enterprise Fund, the Polish Private Equity Fund I and II and the Polish-American Enterprise Fund.
CSFB raises $1.9bn for secondaries
New York-based CSFB Strategic Partners, the private equity secondary arm of captive manager CSFB Private Equity, has closed its CSFB Strategic Partners II fund on $1.625 billion (€1.29 billion).
CSFB Strategic Partners raised the fund in one year, exceeding the $1.25 billion target set in October 2002. In addition, the group has also closed on $300 million for CSFB Strategic Partners II RE, which coinvests alongside the other fund in secondary real estate investments.
The new fund has already acquired stakes in more than 70 different funds and has drawn 30 percent of the committed capital. CSFB Strategic Partners has not disclosed any specific investments.
Gresham's Fund III raises £153m
Gresham, the UK mid-market private equity house, has announced an interim closing on the first fund it is raising since gaining independence from Zurich Financial. Gresham, which is looking to raise £200 million, has raised £153 million so far.
The firm has secured commitments from eleven investors for the fund, Gresham III, which was launched in April this year. The firm said it hoped to reach the £200 million target early in 2004.
Paul Marson-Smith, chief executive of Gresham, said: “We are delighted that Gresham III has reached this interim close so quickly, particularly in the current environment, and we are now rapidly approaching our £200 million target. Deal flow is looking very good and it remains a buyers market. We believe 2004 will be a vintage year.”
Activa Capital closes €162m fund
Activa Capital has beaten a target of €150m by closing its latest mid-market private equity fund at €162m.
Activa Capital Fund FCPR was raised without the use of a placement agent, which the firm said reflected ‘strong and transparent relationships’ with its investors. The fund was backed by a range of European institutions including Hermes Pensions Management as a cornerstone investor. Other backers included AG2R, Partners Group, Proventure, and Scottish Widows.
The firm said 35 percent of commitments came from pension funds; 24 percent from insurance companies; 23 percent from familyoffice investors; and 17 percent from fund of funds.
Standard Life closes billion-plus fund
The private equity group of Edinburgh-based insurer Standard Life has closed European Strategic Partners II (ESP II), its second dedicated fund of funds. Launched in October 2002, the fund raised €1.09 billion ($1.38 billion) from investors in the UK, continental Europe, North America, Asia and the Middle East.
Standard Life Investments (Private Equity) now has €2.4 billion of capital under management, making it one of the largest fund of funds managers active in Europe.
The group said 53 per cent of commitments to ESP II came from some 40 institutional clients. The remaining capital has been provided by Standard Life. Law firms SJ Berwin and Debevoise & Plimpton advised on the formation of the fund.
ESP II will invest the bulk of the capital in mediumand large-size European buyout funds and is mandated to use up to €240 million for co-investments. According to Jonny Maxwell, chief executive Standard Life Investments (Private Equity), the fund can also invest a significant amount of capital acquiring secondary interests in private equity partnerships.
Commenting on the fund's prospects in the current investment climate, Maxwell said in an interview: “We expect the buyout market to get busier throughout 2004 and busier still in 2005. There will be more corporate interest in M&A than there is now, but trading between private equity firms is also going to increase further as funds reach the end of their investment cycles and choose to sell assets on to other managers who can take them to the next level.”
LMS backs Inflexion fundraising
Listed UK mid-market private equity firm Inflexion has raised £21 million and acquired a portfolio of interests from London Merchant Securities (LMS) in exchange for a stake of at least 53.7 percent in the firm.
The £21 million funding comprises an open offer – of which LMS has subscribed for £6 million – and a deferred investment of a further £15 million. Robert Rayne and Martin Pexton, the chief executive and director of corporate development respectively at LMS, will become nonexecutive directors of Inflexion following the deal.
WL Ross, IPE launch €250m French fund
Investors in Private Equity (IPE), the Paris-based private equity firm headed by Philippe Nguyen, has teamed up with US turnaround firm WL Ross to launch a €250 million ($309 million) buyout fund targeting the French market.
“We believe there is excellent potential for middle market medium-term industrial development transactions in Europe, especially France,” said Wilbur Ross, chairman of WL Ross, who will be chairman of the investment committee of the newlylaunched fund.
Nguyen, who will be chief executive officer, founded IPE in 2002 with four other partners and three associates, after eight years as head of private equity activities, first at Caisse des Depots et Consignations (CDC) and then at Credit Lyonnais.
WL Ross & Co, based in New York, has sponsored more than $2.5 billion of private investments in the United States, Japan and Korea since its founding in 2000 by Wilbur Ross, 66, who was previously executive managing director of Rothschild Inc.
With the new fund, IPE and WL Ross will be competing against fellow French houses active in the mid market such as Alpha Associes, Astorg, Atria, Chequers Capital and LBO France.
Paris based Global Private Equity is acting as placement agent.
Dunleavy, Blagdon to run Citi placement unit
Citigroup has made a change of management at its fund placement business. Loren Boston, who has led the bank's Private Equity Fund Group since 1999, has left the bank to pursue other professional opportunities, according to sources.
The placement group, which is part of Citi's Financial Entrepreneurs Group and a division of Citigroup Global Markets, will now be led by Patrick Dunleavy and Douglas Blagdon, according to one source. Both professionals are currently based in New York. Dunleavy, who like Boston used to work for Deutsche Banc Alex. Brown, and who joined Citigroup in 2001, is already a member of the fund placement group. Blagdon joins from another part of Citi's investment bank. They are expected to run the placement business as global co-heads.
During Boston's tenure, Citigroup placed a number of large private equity funds, including the €2.7 billion ($3.44 billion) Charterhouse Capital Partners VII, which held a final close last August.
Other firms the group has raised capital for include Nordic Capital, which closed a €1.5 billion fund last February. The firm is currently representing Terra Firma Capital Partners, Avenue Capital Group, Globespan and Hicks Muse Tate & Furst, which is working on its second European buyout fund.
KKR's Richardson joins Hicks Muse
Hicks, Muse, Tate & Furst, the Dallas, Texas-headquartered buyout firm, has appointed Neil Richardson to join its European team in London. Richardson, who is 47, joins the team from rival buyout firm Kohlberg Kravis Roberts, where he was a partner based in the London office.
A spokesperson for Hicks Muse described the appointment as part of the firm's ‘normal teambuilding.’ In a letter to investors, partners Dan Blanks and Kelly Mayer wrote that Neil brought 23 years of experience and strengthened the firm's ‘senior resources in Europe’.
Neil's arrival at Hicks Muse's London office is a boost for the firm, which is currently in the process of raising its second buyout fund dedicated to the European market. The fundraising target is €1billion ($1.28billion).
Two new partners at Permira
Philip Bassett and Martin Clarke have been promoted to partners at Permira, the private equity firm with five European offices and one in New York.
Bassett's promotion is a reward for his role in spearheading the firm's muchvaunted fundraising for Permira Europe III, which closed at €5.1billion in October 2003. Bassett joined Permira in 1995 and has led its investor relations team with responsibility for marketing and investor liaison since 1999.
Speaking of the promotion, Bassett said it “reflects the importance attached by Permira to the investor side of the business”. He added the fivestrong investor relations team was now liaising with some 154 investors in Permira's funds and was providing a much greater quality and quantity of information than in previous years.
Clarke has enjoyed more immediate recognition, having joined Permira from PPM Ventures in 2002 to develop the firm's presence in the consumer sector. The sector now boasts the largest investment team within Permira, having recruited two additional members last year when Alex Emery joined from McKinsey & Co and Leanne Buckham from PwC Transaction Services.
NM Rothschild builds mezzanine team
NM Rothschild & Sons, the UK-based investment bank, has further expanded its UK mezzanine operations with the appointment of Craig Thomson, a former director at Pricoa Capital Group.
Thomson, who joined Pricoa in 1997, joins the bank as deputy head of its Mezzanine Finance team.
Thomson will report to John Sealy, who joined from ABN AMRO Capital to head up Rothschild's new Mezzanine Finance operation in January 2003. The team also comprises Neil Cox, who joined the team from Rothschild's Investment Banking operation in March 2003.
Sealey left ABN Amro in 2002 after the bank announced it would close its mezzanine operations in February of that year. The decision came despite the bank raising a third party fund, the Second ABN AMRO Mezzanine Partnership LP fund, which closed on $150 million in October 2001.
Altor hires new partner
Hugo Maurstad, a former director and head of the Norwegian office of management consultants McKinsey & Co, has become the sixth partner to be appointed at Scandinavian buyout house Altor Equity Partners.
Maurstad, who begins his new job in March 2004, joined McKinsey & Co in 1991 and worked in its Oslo and Chicago offices. His main focus was on financial institutions, corporate finance and private equity and he provided services including corporate transformation, strategy and governance to clients in Europe and the US.
“He has valuable experience in running and managing business transformation programmes in Nordic countries, and that will help us in terms of the active ownership we are planning to add to portfolio companies,” said Harald Mix, founder of Altor.
Prior to joining McKinsey, Maurstad was managing director of Lefac Group, an Oslo-based finance company, where he worked from 1988 to 1991. He holds a Master of Management and Economics from the Norwegian School of Management.
O'Melveny to build European franchise
US law firm O'Melveny & Myers has announced plans to invest significantly in Europe and build up a team of European private equity lawyers based in London to complement its existing platforms in the US and Asia.
The firm, which already has an office in London, has appointed Matthew Hudson managing partner and head of European private equity and corporate finance, and has made John Daghlian a partner, to lead the expansion.
Prior to joining O'Melveny, Hudson worked at European law firm SJ Berwin as well as the European merchant banking operation of Credit Suisse First Boston. He has also worked as a consultant to Coller Capital, the London-based private equity secondaries specialist.
Daghlian joins from SJ Berwin, where he was a partner and senior member of the firm's market-leading European private equity fund structuring team lead by Jonathan Blake.
In an interview, Hudson said the firm's ambition was to challenge Europe's incumbent private equity specialists both in transaction-related advisory work and fund formation. Part of the brief was to assemble a team of 20 private equity lawyers of various levels of seniority over the next 18 months.
Soros targets European utilities
Soros Private Equity, the private equity business of the US-Hungarian financier George Soros, is considering plans to step up its activity in the European utilities sector and has appointed Nick Baldwin to advise on opportunities.
Baldwin is the former chief executive of Powergen, the utility he left in 2002 after it was bought by German power group E.ON.
Speaking to Reuters, Baldwin said he would be advising Soros Private Equity on “whether or not they want to be interested” in the sector.
Commerzbank builds leveraged finance team
Commerzbank Securities (ComSec) has made a brace of appointments at its European leveraged finance team ahead of what the bank expects to be a significant pick-up in the German leveraged finance market.
ComSec has appointed Thorsten Gladiator as transaction team leader for its Frankfurt-based capital structuring group (CSG), while Susana Gomes joins the unit in London as an associate. They will report to Chris Day, head of transaction management at CSG.
Gladiator was previously with UBS in Frankfurt for three years where he was a director in the leveraged finance and sponsor coverage group. Prior to this, Gladiator was at Dresdner Kleinwort Wasserstein. Gomes was previously with CSFB in the leveraged finance group for over three years where she worked on several large European LBO transactions in various industries.
In addition, ComSec has appointed three analysts. Christian Heller, Miriam Seidler and Silke Büch have recently joined the bank and will work within Commerzbank Securities' capital structuring team based in Frankfurt.
Carlyle appoints new European venture chie
US private equity firm Carlyle Group has made a senior appointment at its European venture team hiring David FitzGerald, a former partner at Apax Partners.
FitzGerald becomes managing director and cohead of Carlyle Europe Venture Partners alongside Wolfgang Hanrieder. FitzGerald joined Apax in 1999 and was responsible for later-stage telecoms investments of Apax's European fund.
FitzGerald will focus on later-stage investments, including corporate carveouts, in technology companies across Europe. The firm is currently investing Carlyle Europe Venture Partners, which was launched in April 2000 and is 53 percent committed.
“I am delighted that David FitzGerald has joined the team. His experience in larger deals, and deep industry knowledge will be a great asset to drive the team forward. We are focusing on mid-market later-stage investments with lower risk profiles to achieve a balanced portfolio of early and late stage companies,” said Hanrieder.
Acanthus and MMC complete merger
A new fund placement and corporate advisory business has been formed from the merger of Acanthus Advisers and MMC Advisers.
The newly created business will retain the Acanthus name and will be headed by three managing partners: Armando d'Amico, who established Acanthus in 1998, plus Dermot Crean and Paul Hart, who co-founded MMC in 2001. A six-strong team also includes principals Ian Burgess, Laurent de Rosière and Stephen MacLeod Barnes.
The merger follows an existing joint venture arrangement between the two firms dating from 2002, which led to the award of a joint mandate to raise a fund of up to €110 million ($137 million) on behalf of Milan-based private equity firm Natexis Cape.
Nova hires team to buy venture deals
Nova Capital, the London-based niche secondaries specialist, has made two senior hires to add a venture capital operation to its existing buyout-focused business.
Nova, which was set up in 2002 to acquire, or manage on behalf of their owners, portfolios of direct private equity investments, has appointed executives Olav Ostin and David Tate to lead Nova's expansion into the venture capital sector.
Ostin joins from ETF Group, a venture capital firm headquartered in Lugano, Switzerland. Tate's previous role was at UK stockbroker West LB Panmure, where he was head of investments.
David Williamson, a Nova co-founder, said in an interview Ostin and Tate had been recruited in order to “spearhead a real attack on the venture space”, where the firm had identified significant opportunities to acquire transatlantic venture portfolios from European managers.
Nova focuses exclusively on purchasing and managing direct investments, as opposed to other participants in the private equity secondaries market such as Coller Capital and Lexington Partners, which originally built franchises acquiring fund investments and have since added capabilities to invest in direct deals as well.
Nova has not raised a fund, but will work with a select group of investors including the mainstream secondaries houses to provide capital for the transactions it sources and executes. One such investor, Caledonia Investments Plc, an investment company listed on the London Stock Exchange, in February of last year acquired a 33 per cent equity interest in Nova.
In late 2002, Nova completed its first transaction, the acquisition of a €100 million portfolio of early and mid-stage buyout investments in 20 UK companies. The assets were acquired from LICA Development Capital, a private equity firm in London.
“We have a strong sense that the niche market that we are operating in is really beginning to open up now,” said Williamson. “At least half the opportunities we are seeing are venture investments, so adding expertise in this areas is a logical move.”
Hanna leaves Compass for Cadbury
Cadbury Schweppes, the confectionery and beverages company, has signed up Ken Hanna as its new chief financial officer from private equity firm Compass Partners.
Hanna will join Cadbury Schweppes on March 1 2004 as an executive director prior to assuming the CFO role in April.
Hanna, the former chief executive of food and agriculture group Dalgety, joined Compass in 1999 as a partner. He aimed to bring operating experience to Compass' $1 billion European fund, which it is still investing.
Compass has offices in London, New York, Frankfurt and Stockholm. The has completed seven European deals including the buyouts of Woods Air Movement from Marconi, and Necta Vending, an Italian vending machine manufacturer, from Electrolux.