F&C holds €90m first close

F&C Asset Management has held a €90 million first close on its second European mid-market fund of funds, F&C European Capital Partners II, according to a statement. 

All of the investors so far, which includes UK, Dutch and German pension funds, have been investors in either the previous fund or in other F&C funds, Hamish Mair, head of private equity funds at F&C, told Private Equity International.  
“Not all investors that are in our previous fund are in the first close but we expect quite a few of them to be involved in subsequent closes, so it’s a bit early to indicate what the re-up rate is,” he said. 

Fundraising has been challenging, as confidence is generally quite low, Mair admitted. “Therefore decision-making is quite drawn out and that makes it difficult to get people assembled on time.” 

The firm hopes to raise approximately €200 million for this fund, slightly more than its €173 million F&C European Capital Partners I, its predecessor from 2008. The fund will be in market for the next 18 months, Mair said. 

It will focus on investing in European mid-market buyout funds, which F&C defines as GPs that acquire companies with an enterprise value between €25 million and €500 million. The fund will back between 15 to 25 GPs.  

Unlike its predecessor, F&C European Capital Partners II also will invest in secondaries. F&C already has a secondary vehicle, Aurora Fund, a €45 million 2009 vintage, which is “largely committed now”, according to Mair. F&C “has no immediate plans to raise a successor for that”. It’s unclear whether F&C plans to completely merge its secondaries activity into its fund of funds business.  

“Clearly investing in secondaries is a significant part of our activity,” Mair said. “Our experience in that area has increased quite a bit in the last five years. Our deal flow is better established and although it depends on pricing; there are attractive opportunities,” he added. 

Up to 30 percent of the fund will be reserved for co-investments, which is mainly to enhance returns, Mair said. “Through co-investments you can to some extent cherry-pick the deals that the funds have done. It’s something we have done quite successfully for a number of years and it has added to our returns,” he said.