Montagu Private Equity, the European mid-market firm, has overcome the difficult fundraising environment raising €2 billion for its latest fund, a source close to the firm confirmed.
The London-headquartered firm began marketing its fourth fund with a hard cap of €2.5 billion around two months ago, when it received a €60 million commitment from Massachusetts' state pension. The firm is on course to match the size of its 2005 third fund of €2.3 billion.
Fund IV will pursue the usual strategy of targeting mid-market companies with enterprise values of €100 million to €1 billion across Northern Europe.
The firm declined to comment, but in an interview with UK daily the Financial Times, which first reported the €2 billion in capital commitments on Wednesday, Montagu’s chairman Chris Masterson said the firm had managed to avoid much of the difficulty anticipated in the current fundraising environment. “We started raising this fund 42 years ago [when the partners first began private equity investing]. It has been no easier or harder than it has ever been, because Montagu has a lengthy and consistent record of good returns.”
As reported on PEO, Montagu received an investment period extension for Fund III from limited partners earlier this year, one firm among many in the industry that asked LPs for more time to finish investing older funds. Several sources told PEO that LPs had been happy with Montagu's performance, especially since the firm has distributed about €1 billion in the past 12 months.
One LP in Fund III told PEO Montagu took the “prudent” approach in securing the extension to make sure the firm was not completely out of the money when entering fundraising for Fund IV.
Fundraising activity among private equity firms has begun to resurge following the historic lows brought on by the financial crisis. Montagu is one of a number of European firms – such as BC Partners and Barclays Private Equity – whose fundraising has been eagerly anticipated and expected to serve as a bellwether for the wider appetite among institutional investors to make private equity commitments.
Reports earlier this week that Apax Partners, one of Europe’s largest private equity firms, would next year approach investors to raise an €11 billion fund, were premature, according to a source close to the firm, who said it was “many months away” from settling on a target fund size. Apax declined to comment.