Graham Hutton, the former chief executive of fallen private equity house Morgan Grenfell Private Equity (MGPE), is set to return to the European leveraged buyout market.
According to the Financial Times, Hutton has teamed up with former colleague Matthew Collins, who yesterday quit as global co-head of leveraged finance at Merrill Lynch. The pair are said to be setting up an investment boutique called Hutton Collins and intend to raise a E500m [not $500m as reported in the FT] mezzanine and speciality finance fund that will invest in European leveraged buyouts.
Hutton lost his job at MGPE in the summer of 2001 after plans to buy the firm out of Deutsche failed. During his time in charge, the firm took a big bet on Slec, the formula one holding company, in a deal that led to a huge loss and has been directly linked to Hutton’s exit and ultimately MGPE’s folding into Deutsche Bank Capital Partners.
Collins, a well-known leveraged finance specialist in London, first worked with Hutton in 1987. In 1990, the two set up a leveraged finance arm for Deutsche Morgan Grenfell. Collins later joined Merrill after a spell at the leveraged arm at Bankers Trust. According to the Financial Times, he arranged the financing for a number of MGPE deals including the buyout of Vianova Resins.
Asked about his prospects for raising a new fund following the developments at Deutsche, Hutton is quoted in the newspaper as saying that institutional investors in MGPE’s funds were “very supportive”, accepting that some investors would need to be given more detailed information about the events.
A London marketeer who has known both Hutton and Collins for years said this morning that news of Hutton attempting a comeback wasn’t much of a surprise. Speaking to PEO, the source commented: “There is nothing extraordinary about this. They will be doing what they have always been doing. Raising a first-time fund is never easy in the current climate.”
Another London-based private equity managing partner commented: 'MGPE during Graham's time was always good at the PR, though if I were him I'd have waited until I'd at least got some cornerstone investors into my fund before briefing the FT.' A spokesperson for the firm told PEO that Hutton Collins is presently reviewing placement agent candidates and that no funds have been committed to the planned fund: 'it's very early days' he said. It was also comfirmed that only Collins thus far has left Merrills to join the new firm.
A source at Merrill Lynch declined to comment.