Bridgepoint Development Capital (BDC), the small-cap arm of UK-based upper mid-market investor Bridgepoint, is in exclusive negotiations to take over Edmond de Rothschild Capital Partners, a private equity unit of Edmond de Rothschild Group, PEI has learnt.
BDC is currently doing due diligence; assessing the quality of Edmond de Rothschild Capital Partner’s fund investments, its team of five private equity professionals and their compatibility with BDC, according to a source familiar with the matter.
The deal, which would require approval from investors in the Edmond de Rotschild Capital Partners’ funds and the financial regulator in France, is at a very early stage, according to the source.
A Bridgepoint spokesperson confirmed the talks, saying 'Groupe Edmond de Rothschild has made [an] approach to Bridgepoint Development Capital to take over the management of funds currently managed by Edmond de Rothschild Capital Partners', but declined to comment further.
It is understood Edmond de Rothschild Group plans to scale back its private equity activity, and to focus on private banking as its core activity. Edmond de Rothschild Group did not respond to a request for comment at press time.
Edmond de Rothschild Capital Partners manages Edmond de Rothschild LBO Fund (ERLF I), a €210 million 2002-vintage and Edmond de Rothschild LBO Fund II, a €300 million 2007-vintage, according to Private Equity International’s Research and Analytics division.
These investment vehicles, which are fully deployed, according to the source, invested in French mid-market growth buyouts. The funds are understood to have a net asset value of €180 million.
BDC is currently investing from its debut fund, a €350 million 2012-vintage. The fund focuses on buyouts and growth capital investments in businesses with an enterprise value of between €20 million to €150 million. It usually invests between €10 million to €75 million of equity per transaction.
Last August, BDC attracted a group of new investors after a group of secondary investors led by HarbourVest Partners and AlpInvest Partners acquired the BT Pension Scheme's €400 million investment in funds managed by BDC, PEI exclusively reported at the time. BDC was able to raise a further €200 million for its current fund, BDC I, at the same time as this secondary process, taking its total assets under management to €800 million. Approximately half of this total is thought to be still available for new investments.
Bridgepoint is also investing its larger flagship fund which invests in businesses with enterprise values between €150 million to € 1 billion. Last December it bought Cambridge Education Group, an international schools operator for £185 million (€223 million, $303 million) from UK-based Palamon Capital Partners, using its current €4.84 billion Bridgepoint Europe Fund IV. This vehicle secured a 12-month investment extension last summer after it became apparent it would not need to fund as many add-on acquisitions as planned. This fund is approximately 80 percent invested.