News: Funds

Danske FoF has first close at €349m
Danske Private Equity Partners has held a first closing at €349m for its Danske PEP II fund of funds as it aims to raise €600m for US and European investments.

The fund of funds, which will invest in unlisted companies via European and North American venture and buyout funds, has received approximately €50m from Danske Bank and Danske Bank Life Insurance, with the remainder coming largely from Danish institutional investors. It received legal advice from Chicago-based law firm Kirkland & Ellis.

The fund has a final closing date of September 2002, although Danske Private Equity managing director Bjørn Haugaard Rubin expects to achieve the fund's €600m target before that date. ?Investors have shown strong interest, particularly considering the intensified international competition and uncertainty presently characterising the financial markets.?

Rubin said Danske PEP II would limit its coverage to around 15 funds. ?We believe that this will enable us to make the most of our proactive deal-sourcing network. We will make use of our excellent knowledge of the Nordic markets as well as our strong access to US funds.? The new fund is about to start making investments.

LGT closes Crown Technology FoF
LGT Capital Partners, the Swiss-based alternative asset manager, has closed its Crown Technology Ventures fund of funds at €192m, in line with its €150m-€200m fundraising target.

Crown, which will make investments in a diverse range of venture capital funds active in the technology sector, has attracted institutional investors mainly from Germany and Austria. The fund has already invested €100m in 22 venture capital funds and plans to look for similar investments.

Giacomo Biondi Morra, vice president at LGT Capital Partners, said: ?We are pleased that we have achieved our target in what are difficult market conditions. With this program, our strategy is to create a well-diversified investment program that will make investments in venture capital across the US, and Europe. It is an ideal core position in venture capital for private and institutional investors to build a private equity portfolio.?

Germany-based Solutio acted as the placement agent for the fundraising, which was co-ordinated by Maximilian Broenner, partner at LGT Capital Partners. Biondi Morra also confirmed that LGT is planning to launch a similar fund later this year that will specialise in buyouts.

Innova 3 raises €110m in first closing
Innova Capital, the Polish private equity fund adviser, has announced the first closing of its Innova/3 LP fund. The fund, which is earmarked for Central European investments with particular emphasis on Poland, has so far raised €110m, and the managers are confident of hitting the final closing target of €150m in the second half of 2002.

According to Magdalena Nowak at Innova Capital, the fund is proving popular across Europe. ?We have received a lot of interest from European multinationals looking to invest in Central Europe.? Nowak also confirmed that the investment proposition is an orthodox one: ?We are looking to invest between €5-15m in firms with strong crossborder links,? she said. Innova Capital has invested €120m in Polish companies to date, with this figure expected to rise to €170m by 2005.

Steve Buckley, managing partner at Innova Capital, believes that the funds popularity is the result of its successes to date. ?The annual rate of return registered by Innova on 5 out of 6 sold investments was above 50 per cent, which makes our products an attractive asset for investors.?

If, as expected, the final closing target of €150m is reached, Innova Capital will have funds in excess of €350m under management. The firm runs two other funds, Innova/98 and Poland Partners. Innova/98 is a €140m private equity fund of which 60-65 per cent has been invested in Poland. Its investors are comprised of major American and European institutions that invest globally. Poland Partners is a €70m venture capital fund for investment exclusively in Poland. Financed entirely by private American institutions, the fund started operations in April 1994. Its current portfolio consists of 14 companies.

€166m in latest CapMan fund
Private equity firm CapMan has secured €166m for the first closing of its seventh fund, CapMan Equity VII. The firm says it aims to close the fund by the end of June and is expecting significant commitments from new investors. So far the fund has 13 investors including the Swedish public pension fund Sjötte AP-fonden and the European Investment Fund.

Around two thirds of the fund will be invested in medium-sized buyouts and approximately one third in telecoms and IT companies. All deals will be in the Nordic region.

According to Ari Tolppanen, CEO of CapMan, the present market situation in the Nordic area offers excellent opportunities for private equity investors to make new investments. ?Traditional industries will continue to consolidate and companies will divest their non-core assets. In addition, valuations have come down and this in turn accelerates investments in technology companies,? he said.

The new fund takes total assets CapMan has under management to €1.3bn, of which €465m are managed through Access Capital Partners, the Paris-based fund of funds that CapMan is affiliated with.

Real estate funds raise $17bn in 2001
Professional services firm Ernst & Young has published research that reveals that ?value-added funds? recorded in 2001 the biggest annual capital closing ever by the sector, raising more than $17bn.

The survey, by Ernst & Young's real estate private equity funds services group, polled managers representing $72.3bn of equity in 145 funds raised between 1988 and 2001. It found that more than 60 per cent of the $20bn currently available for investment by opportunity and value added funds is targeted for investment outside the United States, with the most popular locations being Western Europe and Asia.

The survey also highlights a heavy concentration of capital in relatively few hands. EY says that 13 individual general partners raised about 70 per cent of the total equity raised in the last decade.

Fundraising in 2001 was led by companies such as Lehman, which secured $1.6bn for the Lehman Brothers Real Estate Partners, and Soros Fund Management, which raised $1bn for the Soros Real Estate Investors CV fund. The trend has continued into 2002, with Chanin Capital Partners and Cohen Asset Management announcing the launch of the $300m Sainte Pierre Real Estate Liquidity fund, which will target properties that financially troubled companies are wanting to sell.

Duke Street tops up Duchess
Duke Street Capital Debt Management (DSCDM), the debt management division of Duke Street Capital, is to increase the size of Duchess 1, Europe's largest Collateralised Debt Obligation (CDO) fund investing in LBO-related debt. Closed originally in June 2001 at €750m, Duchess is set to raise another €250m from existing investors as well as first time buyers. To raise the additional capital, Jamie Weir and his team at DSCDM is using a tap issue arranged and underwritten by CIBC World Markets, a mechanism that has not been used for a CDO fund before.

Fuel cell focused VC launched
Royal Dutch Shell, Mitsubishi and Johnson Matthey have set up a VC firm, Conduit Ventures, to invest in the fuel cell industry. The aim is for Conduit to raise a $100m (€116m) fund to invest in early stage (i.e. post-start up) businesses. Conduit Ventures aims to invest in companies that have established fuel cell and hydrogen technologies and are seeking further capital for commercial sales and development. Conduit said it would invest between US$1-10m, taking minority stakes of between 10 and 40 per cent in investee companies.

Capvent to manage RWB retail fund of funds
Capital Venture Partners AG (Capvent), the Zurich-based private equity fund of funds management group, has been recruited by RenditeWertBeteiligungen (RWB) to provide investment advisory services to its two new funds of funds that are aimed at retail investors. Capvent will assist RWB, which runs one of Germany's largest fund of funds available to individuals, in its strategy to invest approximately €375m in the asset class over the next five years. The aim is to invest in buyouts and venture capital funds, principally covering Europe and the US. Initial investments have already been made in funds managed by private equity groups Cinven and Alta Berkeley.

Allianz commits €300m to venture investing
Allianz AG, the German insurer and financial services provider, has unveiled an add-on element to its private equity business, Allianz Venture Partners. The new vehicle, launched in August 2001, now has €300m to invest in early stage financial services companies over the next three to five years. It will help fund in-house projects as well as invest in external businesses that operate in asset management, private banking, insurance, retail and investment banking.

Irish public/private VC strategy for biotech
A public/private partnership between government agency Enterprise Ireland and Seroba BioVentures has been launched, creating the first venture capital fund dedicated solely to the Irish biotechnology sector. Seroba, a specialist biotechnology and life sciences fund manager has set up a €25m Irish BioScience Venture Capital Fund. The fund, which has already completed a first closing of €15m, will invest in seed and early stage projects in Ireland from the biotechnology, pharmaceutical and medical fields which are emerging from research institutes, universities, research hospitals and existing companies.

DTI brings forward partnership law change
The UK Department of Trade and Industry (DTI) has brought forward plans to change UK partnership law to allow qualifying private equity partnerships to comprise more than 20 partners without having to put into place complicated contractual provisions. At present under UK law, general and limited partnerships are subject to a legal maximum of 20 partners, with a number of exceptions. Law firm SJ Berwin has been discussing a narrower exemption with the DTI, which would apply to investment funds which are classed as ?collective investment schemes? for regulatory purposes and are managed by an authorised entity. It is that exemption which will be brought into effect on 22 March 2002. A spokesperson at SJ Berwin said: ?Whilst this change is not sufficient to cover all investment funds, there are a large number which will be able to take immediate advantage of it.?