Jumbo European mezzanine fund from CapVest

CapVest Equity Partners, part owned by US insurer AIG, is launching a E1bn fund to invest in the European mezzanine market.

The fund, to be called AIG Mezzvest, plans to provide mezzanine finance to European companies and to securitise the cash flows generated.

Mezzanine paper has traditionally been regarded as something of a novelty amongst investors but the appeal of increased yield whilst remaining relatively remote from straight equity-type risk is attracting a growing number of buyside institutions.

Stephen Mostyn-Williams, the former head of acquisition finance at law firm Shearman & Sterling, Lemy Gresh, who used to head Bankers Trust securitisation team, and Doug Evans, of Bankers Trust’s leveraged finance team, will manage the new fund on behalf of Capvest.

CapVest Limited was established in September 1999, by former Bankers Trust private equity professionals including Randl Shure, Seamus FitzPatrick and Scott Paton with backing from global insurance services giant AIG.

The private equity group says that it makes EUR10 million to EUR50 million equity investments giving it control or substantial minority investments in companies with enterprise values of between EUR25 million and EUR500 million. It has participated in such deals as the acquisition by Punch Taverns of the Allied-Domecq pub business in 1999.

CapVest declares on its website that it has “identified telecommunications, services and leisure as exceptional growth sectors with compelling macro-economic drivers.”