F&C trust increases private equity exposure

Foreign & Colonial Investment Trust is targeting an annual commitment of £75 million to private equity as it steps up its exposure to the asset class from 5% to 10%.

Foreign & Colonial Investment Trust, a UK growth investment trust, will expand its exposure to private equity with an annual target of £75 million (€110 million) per year.
 

The general feeling is that private equity as an asset class is going to keep growing for several years to come, so it made sense to have more money allocated to it.

Jeremy Tigue, F&C Management

Foreign & Colonial Investment Trust said in its interim results for the half year ended 30 June that it will increase its allocation to private equity, originally targeted to be approximately 5 percent of the trust’s total assets by 2008. The trust is now targeting an annual commitment of £75 million to private equity in order to reach a minimum allocation of 10 percent between 2009 and 2013.
 
“We started with five percent to get used to private equity and get some exposure,” said Jeremy Tigue, fund manager at F&C Management. “Everything has worked out well so far and we wanted more exposure to this asset class. The general feeling is that private equity as an asset class is going to keep growing for several years to come, so it made sense to have more money allocated to it.”
 
As part of the change in strategy, Foreign and Colonial Investment Trust has committed to funds investing principally in Asia: $50 million to funds managed by Pantheon, a London-based fund of funds manager, and $25 million to HarbourVest, a US-based fund of funds and secondaries specialist.
 
Tigue said that the trust has had a broad strategy so far, but will increase its focus on funds investing in the emerging Asia markets. “We’ve tried to spread the net as wide as possible so far as we didn’t want to over concentrate on a particular area. When we started, we concentrated on the US, the UK and Europe. In 2002, we thought that Asia was too risky as it hadn’t developed enough and lacked a track record. Now, however, we are more confident in the region and so we wanted more exposure.”
 

Tigue: confidence in Asia

The trust’s previous allocations to private equity were in 2002, when it committed $115 million to Pantheon Europe Fund III, which closed on €470 million in early 2003, and $120 million to HarbourVest Partners VII, a vintage 2004 $4.5 billion fund consisting of a $2 billion US venture fund of funds, a $2 billion buyout fund of funds and a $500 million mezzanine fund of funds. In 2005, the trust invested $69 million in Dover Street VI, a $600 million specialist secondary fund managed by HarbourVest.
 
Tigue said that the trust’s private equity investments returned £8 million in the first half of this year and approximately $2.5 million in 2005.