News: Funds

Bridgepoint buyout fund oversubscribed
UK private equity firm Bridgepoint Capital has held a final closing of its Second European Private Equity Fund (EPEF II) at just over €2bn, some way ahead of the fund's original €1.6bn target.

The latest fund, which has an investment period of up to five years, continues Bridgepoint's strategy of investing in European middlemarket buyouts. The fund has received investments from 60 investors, including €1bn from existing investors in EPEF I as well as new investors from Europe, North America and the Far and Middle East.

Bridgepoint partner James Murray said it was good news that the fund had surpassed its original target. ?I think the fund's success reflects strong investor interest in mid-market European buyouts. Over half of the fund's financing came from previous investors which is a testament to our strong realisations record.?

The firm is targeting investments in buyout transactions capitalised at up to €400m, making equity investments of between €15m and €100m. The fund has already made its first three investments: the €206m buyout and de-listing of WT Foods, a UK manufacturer and distributor of ethnic and speciality foods; the €176m deal to acquire a 55 per cent stake in Virgin Active, the health and fitness business and the €67m buyout of the UK specialist hire company Hydrex Group.

Coller raises $700m for fourth fund
UK private equity secondaries specialist Coller Capital has to date raised $700m towards its fourth fund. The firm has raised commitments from return investors including CalPERS, State of Michigan and Barings. New investments include $75m from Canadian Pension Plan and $42m from Barclays Pension Fund.

The fund is well on its way to achieving its $1bn target, scheduled to be reached by the end of the summer. The target is double the firm's previous $501m fund. In a recent interview, Coller Capital chief Jeremy Coller, referring to the firm's latest fund said he didn't anticipate any difficulties in finding deals: ?the challenge will be to buy the right ones.?

Coller Capital specialises in the purchase of secondary interests in venture capital, mezzanine and buyout investments and also direct investments. The firm has in excess of $1.7bn under management.

In addition to the Lucent deal last year, Coller's major deals include the £670m acquisition of NatWest's private equity investments from Royal Bank of Scotland as well as the $265m secondary purchase of Shell's US and European private equity funds.

PAI III ahead of target
Paribas Affaires Industrielles (PAI), the French private equity affiliate of BNP Paribas has to date raised €1.6bn for its PAI Europe III fund that was originally due to be capped at €1.25bn.

Parent-company BNP Paribas has made a €250m commitment to the fund. The fund, which is now looking to raise in the region of €1.8bn, is expected to close in late June.

Reports in April suggested that PAI is likely to be bought by its management as part of a strategic review undertaken by BNP Paribas chairman Michel Pébereau. BNP Paribas has reduced its commitment to private equity in the past four years and PAI now seeks the large majority of its investments from external sources. PAI is France's largest LBO fund with over €7bn under management.

A-P 6 buys into Nordico
Swedish private equity firm Nordico Invest is to merge its operations with Industrial Equity, a division of Swedish state pension fund A-P Fonden 6, to create a new private equity fund that will invest in the Nordic middle market. The new entity, Nordico Equity, will initially have around SEK1.5bn (€160m) under management and will comprise around 20 investments, with Industrial Equity contributing eight holdings and the remainder coming from Nordico Invest.

The new fund is looking to raise a further SEK1.5bn, with A-P Fund 6 expected to lead the investment. Bank of America Equity Partners, who have been direct investors in Nordico Invest, will be co-investors with Nordico Equity. The other investors in the fund are the Fourth AP Fund, FöreningsSparbanken, Sirius International, Lantmönnen (the Federation of Swedish Farmers), SLR (the Swedish Farmers' Supply and Crop Marketing Organization) and KP Pension & Försökring.

Botts launches second midmarket fund
Botts & Company, the London-headquartered private equity firm, has launched BCP 2, its second European mid-market buyout fund. The fund, which has a target of €325m and is looking to hold a first close in September, has secured a €100m cornerstone investment from investors including Hermes Investment Management and Bank of Scotland. Both institutions own minority stakes in Botts.

BCP 2 will be investing between €10m and €70m in buyouts and expansion capital situations with a transaction value of up to €200m. Buy and build is the preferred investment strategy. 65 per cent of the capital will be deployed in the UK, with the balance going into continental Europe where Germany is a favoured location.

Commenting on the launch of the fund, managing director Andrew Haining said it was a very consistent message that Botts was putting out to investors. ?In terms of transaction size, type of investment, geography and industry sectors, we'll be doing what we've been doing for the past ten years.?

One strategic change that the firm is set to make with BCP 2 is to focus 100 per cent on management buyouts and expansion capital transactions. In BCP 1 the firm deployed around 10 per cent of its capital in venture investments. BCP 2 will steer clear of venture investments altogether.

According to Haining, Botts has generated an annual IRR of 50 per cent over the past 10 years and returned two and a half times investor's money.

Star rises to €581m close of first fund
European private equity firm Star Capital Partners has exceeded the funding target of its first fund. The Star Fund, which will invest in capital assets and capital-intensive businesses in transportation, energy, oil & gas and telecommunications, has raised €581m, surpassing its original €500m target.

The fund has received backing from a dozen investors, including Royal Bank of Scotland, Santander Central Hispano and One Equity Partners. Each limited partner in the fund has secured co-investment rights, enabling Star to finance very large transactions beyond the normal scope for a fund of this size.

Star's investment approach is described as outsourcing, where the firm aims to acquire underexploited capital sitting on a vendor's balance sheet, leverage the asset and build an independent business around it. The vendor will typically retain a majority stake, which helps Star to lock in the ensuing cashflows. The strategy is explicitly risk-averse.

3i launches €3bn buyout fund
3i, Europe's largest venture capitalist, has launched its fourth pan-European buyout fund, to be invested in the middle market. The group, whose fundraising campaign is likely to benefit from a string of successful recent exits including the buyouts of Go, Fairview Holdings and Coutts Consulting, is looking to raise €1.5bn from third party investors and match every Euro raised with balance sheet money. Jonathan Russell, who sits on the group's executive committee, runs 3i's buyout business. The new vehicle will add significantly to the group's firepower in the European midmarket, following on from the €2bn fund raised in 1999.

Life science fund bypasses early-stage investment jitters
MVM, the UK early-stage life sciences investor, has raised £100m (€161m) at the close of its second fund, MVM International Life Sciences Fund II. It focuses on investments in start up and early-stage life science companies in the UK, Continental Europe and the US. The fund has received commitments from a number of global investors, including Goldman Sachs Private Equity Group, the European Investment Fund, Hamburgische Landesbank, Swiss Re, and Scottish Widows. Investors who supported the first MVM fund, including 3i Group, Friends Provident, Shell, Mitsubishi and Pfizer, also invested in MVM II.

Shorthouse to raise mid-market fund
Fundraising is underway for a new mid-market buyout fund launched by Dominic Shorthouse, a former London-based partner at global private equity house Warburg Pincus. Shorthouse's new firm, London-based Englefield Capital, has appointed UK merchant bank Cazenove and the private placement arm of Merrill Lynch to help raise the fund. Englefield is understood to be looking for €450m in commitments.

ANTS invests in Hutton Collins
Hutton Collins, the new acquisition capital firm established by Graham Hutton and Matthew Collins, has secured a cornerstone for its new fund that will specialise in mezzanine and specialty financing. Abbey National Treasury Services (ANTS) has committed €115m to the fund representing a sizeable chunk of the fund target of €600m. As part of the commitment, ANTS will receive a minority interest in the management company.

Sovereign closes third fund
UK private equity investor Sovereign Capital has closed its latest fund, the Sovereign Capital LP III at £120m, twice the amount raised for the second fund. The firm has received commitments to the fund from 20 limited partners, most of which were institutions based in the US such as pension funds and insurance companies. It launched in October 2000 with a £100m closing target.

Coutts investors get access to Carlyle
Coutts & Co has revealed details of an investment partnership with US private equity house Carlyle Group, which will see the private bank invest $114m in seven existing and new Carlyle funds over the next twelve years. The fund, Coutts Private Equity Limited Partnership, is expected to have a twelve-year lifespan with investors committed for the full term. The underlying investments will typically be held for around five years, with capital distributions taking place as investments are realised throughout the life of the fund.

Pru to form new property project
PRICOA Property Private Equity (PPPE), the European real estate private equity arm of Prudential Real Estate Investors, has reached an agreement with Sunrise Assisted Living to form a joint venture to develop residential communities for the elderly in Germany and the United Kingdom. PPPE will take an 80 per cent stake in the project with the remaining 20 per cent controlled by US senior care provider Sunrise Assisted Living. The residential developments will be funded through joint contributions approximately $120m in addition to funding from third-party lenders.