Montagu’s small buyout unit closed

Montagu Private Equity shut down its UK growth capital investment fund in April, releasing investors from £80m worth of commitments.

Montagu Private Equity, the pan-European LBO firm headquartered in London, earlier this year shut down Montagu Capital, a subsidiary investing up to £10 million (€15 million; $18.6 million) of equity capital in small UK buyouts.

The unit, formerly known as HSBC Ventures and operating from offices in London and Manchester, remained part of Montagu Private Equity when the latter spun itself out of HSBC Group. At the time, HSBC Group made a £ 25 million commitment to back a new Montagu Capital fund.

According to a source close to the situation, Montagu Capital went on to secure approximately £55 million in additional commitments from third parties at an interim close. The fund, described at the time of launch as targeting the “micro mid-cap” segment, had a target of £125 million.

However, a number of Montagu Private Equity’s large investors refused to back the fund, said the source, considering it a distraction from the firm’s core business of investing in medium-sized to large buyouts across Europe. Because of this negative stance, the decision was made to close the business down and release the investors in the fund from their commitments.

The unit’s management team, led by managing director Andy Leach and also comprising Martin Green and Tim Smallbone, subsequently left the firm. Tom Chaloner, another member of the group, remains with Montagu Private Equity.

Prior to its closure, Montagu Capital made two investments, one in Enact, an online provider of property-related legal services, and another in Micro Librarian Systems, which sells library automation products to schools and colleges. The two deals are now being managed by Montagu Private Equity.  

The firm is currently investing a €1.8 billion pan-European buyout fund. On its website, it describes its “primary size focus” as between €70 million and €700 million, adding that it will also do larger deals such as the acquisition of Linpac, the packaging business, which it acquired in June 2003 for £860 million.