INVESCO Private Capital (ICP), the New York-headquartered international private equity investor, is to tap the fixed interest market to raise capital for investment in private equity funds.
According to a pre-sale report published by Fitch Ratings on 2 December, ICP is the appointed investment manager of a portfolio of underlying private equity partnership investments that will be funded from proceeds of Tenzing, a collateralised fund obligation (CFO) transaction totalling an estimated $207 million (€156 million). The deal is expected to close this month.
Tenzing is to raise approximately €177 million from the sale of four tranches of rated bonds, Fitch said. A €30 million equity tranche complements the deal, which is being arranged by BNP Paribas, the European investment bank. BNP Paribas has also agreed to provide a liquidity facility for the deal to ensure interest payments to investors can be made on time, regardless of the timing of the collateral’s underlying cashflows.
Calls for this article to ICP in New York were not returned. A spokesperson for BNP Paribas in London declined to comment.
According to Fitch, the investment manager will use the capital raised from the deal to build a portfolio of at least 40 existing and new investments in buyout and venture capital funds predominantly in Europe and North America. Tenzing’s commitment period is scheduled to end in 2007, by which time the investment manager “will aim to ramp up to a maximum of $258 million in commitments”, the Fitch report said.
News of the deal comes shortly after SVG Capital, the London-based fund of funds, successfully completed the sale of €260 million of bonds backed by private equity cashflows into a similar vehicle known as SVG Diamond, a €400 million CFO. Diamond closed in October of this year.
Like Diamond, Tenzing is evidence that private equity fund investors are increasingly attracted to securitisation, as opposed to the more common partnership model, to help fund their investment operations.
ICP has been investing in private equity since 1982 and has offices in Denver, Palo Alto and London. The group offers directly investing venture capital funds, co-mingled funds of funds and separate accounts to third party clients.
As of 30 September 2004, the firm had discretionary assets under management of €1.9 billion. ICP is part of AMVESCAP, the €360 billion international financial services group.