LGV spins off French arm, raises £180m

Legal & General Ventures has closed its 2004 investment scheme on £180 million to invest exclusively in the UK mid-market.

Legal & General Ventures (LGV), the London-based private equity arm of UK insurer Legal & General Group, has completed its annual fundraising round with £180 million (€268 million; $329 million) of fresh capital in its coffers. 

17 third party investors, including six first-time contributors, provided just over 50 percent of the new structure’s capitalisation, which LGV CEO Adrian Johnson described as the passing of a “main milestone: we’ve been raising money every year since 2000 and have made gradual progress towards attracting capital from outside investors.”

LGV’s 2003 fund had raised £155 million, to which its parent contributed £90 million.

The new fund will exclusively invest in the UK consumer, leisure and support services sectors after LGV also announced that its investment teams in the UK and France had decided to “separate” with effect from July 1.

Johnson said after launching the 2004 fund in late 2003, the group decided earlier this year to change strategy and to 'spin off' its operations in France. He said the decision was taken in recognition of the fact that investment conditions in the two markets differed substantially, adding that investors in private equity were becoming increasingly interested in investing in narrowly focussed entities such as country-specific funds.

In an interview, Johnson said that conditions in the French mid-market were now such that it would make sense for a local team to pursue smaller deals than in the UK. In Britain, LGV aims to invest in deals with up to £300 million in enterprise value. 

Comprising five investment professionals and led by Christophe Fercocq, the French team would set up a new management company, change its name and raise its own fund, Johnson explained.

LGV’s two existing French portfolio companies, casino operator Moliflor Loisirs and elastic fibres manufacturer Cheynet Industries, would be managed jointly from Paris and London, Johnson added. Otherwise the two entities would operate entirely separately.

LGV had been active in France for nearly ten years. The change of geographic focus comes two years after LGV decided to withdraw from the German private equity market and to close down its Frankfurt office.

LGV said in a statement its latest fundraising had benefited from a series of exits in the first quarter of 2004 during which its 2001 and 2002 vintage funds, LGV 1 and LGV 2, realised £250 million in cash from four investment.

MVision Private Equity Fund Advisers acted as placement agent for LGV 4.