The team of private equity professionals formerly known as Phildrew Ventures that was part of UBS Capital until a recent MBO, has relaunched itself as IRRfc, a private equity advisory business with an innovative business model.
Instead of raising a fund and making investments, IRRfc will be looking to help institutions to extract value from their private equity interests by seeing them through to exit. The firm will charge a management fee and look for a share of the proceeds that are generated as and when liquidity events are achieved.
The team, consisting of partners Frank Neale, Ian Hawkins, Ruth Storm, Chris Tennant and Robert Jenkins, has been together since the 1980s and has a track record of investing in mid-market buyout situations. However, it decided against the idea of raising capital for new investments.
“We had the debate internally as to whether we should raise a new fund, but decided the mid-market was competitive enough and could do without another private equity fund. In this sense what we’re doing is contrarian and appeals to the times we’re in”, Frank Neale commented.
IRRfc is looking to work with institutions such as banks, insurance companies, pension funds or indeed private equity firms that are lacking either the patience or the skill set to get their investments through to successful exits.
Another group the firm is keen to do business with is funds that specialise in secondary purchases of private equity holdings. “We spoke to several secondaries before launching the company, and they all saw it as beneficial to them. Secondaries don’t necessarily have the skills to manage the portfolios they are buying of others, and they also see us as a marketing force that will work in their favour”, said Neale.
But IRRfc is also offering an alternative to institutions that do not want to sell their interests at the discount that secondaries typically demand. Those looking to retain some of the upside of their positions are invited to hand over the management of their assets to Neale and his colleagues.
IRRfc currently advises the Phildrew Ventures portfolio on behalf of UBS and is looking for other clients. The firm says it is aware of several institutions that are keen to scale back or unwind their private equity assets as market conditions remain difficult.