Ask private equity professionals about the key issues facing the industry today, and the question of whether the market can fully absorb institutional appetite for the asset class going forward will come up sooner or later. Two Dutch pension schemes are taking an unusually bullish view on this.
In February ABP and PGGM, two of the largest pension funds in the world with respectively €150 billion and €53 billion of assets under management, took steps to significantly expand their already very large private equity investment programme. First it was announced that the pair were to take direct control of Dutch investment bank NIB Capital's €14 billion private equity investment division, which they had been instrumental in building after acquiring the bank following its privatisation in 1999.
Under the deal, NIB Capital Private Equity will trade under the name Alpinvest Partners, the old name of the private equity investment manager NIB Capital acquired in 2000. 100 percent of the renamed entity's shares will be transferred to the pensions, which will also receive a one-off dividend payment of €130 million as a result of the restructuring.
While the market was still digesting the move, the pensions served up even more interesting news shortly thereafter, announcing that Alpinvest would be given another €6 billion of pensioners' money for new investment in international private equity.
This new mandate cements Alpinvest's position as Europe's largest private equity investor and makes it one of the three biggest limited partners worldwide alongside The California Public Employees' Retirement System (CalPERS) and GIC, the Singapore government investment corporation. With a total of €20 billion now committed to the asset class, the group has come a long way extremely fast after starting out in 1999 with just €600 million in private equity.
“This mandate will enable us to continue investing in what are very interesting times in terms of investment opportunities, and to further build on our leading position in the international private equity market,” said Volker Doeksen, Alpinvest's chief executive officer.
Following the additional allocation, private equity will account for nearly 2.5 percent of ABP's investment portfolio. PGGM will maintain its seven percent portfolio weighting. As part of the new mandate, ABP and PGGM will both nominate a member to sit on Alpinvest's new supervisory board. In addition, an independent chairman will be nominated, together with two additional members. The firm's executive committee consists of Volkert Doeksen, Paul de Klerk (CFO), Wim Borgdorff, Iain Leigh and Erik Thyssen.
Of the group's current €14 billion under management, €11.5 billion is allocated to its global fund investment scheme, focusing on Europe, the US and South East Asia across all stages, with a further €900 million allocated to co-investments.
The firm currently aims to invest between €1.5 billion and €2 billion annually – an unmistakeable sign that Alpinvest and its pension backers have high hopes indeed about private equity's future.
FORMER CSFB PROS TARGET €600M
Balmoral Capital, a new private equity firm headed by Richard Winckles and Alec D'Janoeff, is seeking to raise around €600m for its debut pan-European fund. According to market sources, Balmoral Capital is hoping to become a major mid-market player in Europe. The firm is believed to be in talks with key potential investors ahead of a planned fundraising launch in the second quarter. Winckles and D'Janoeff headed CSFB Private Equity's European operations from London until November 2001, when they were among seven executives to leave the business following CSFB's decision to scale back its international private equity operation and run it from New York.
WL ROSS, IPE LAUNCH €250M FRENCH FUND
Investors in Private Equity (IPE), the Paris-based private equity firm headed by Philippe Nguyen, has teamed up with US turnaround specialist WL Ross to launch a €250 million ($309 million) buyout fund targeting the French market. The IPE Expansion Fund will target midmarket buyouts mainly in France, both government-owned enterprises and corporate carve-outs. Nguyen, who will be chief executive officer, founded IPE in 2002 with four other partners and three associates. Prior to that Nguyen had been active in private equity on behalf of French banks Caisse des Depots et Consignations (CDC) and Credit Lyonnais.
ITALIAN FUND POSTS €87M FIRST CLOSING
Natexis Cape has achieved a first closing of €87 million ($109 million) for its Cape Natexis Private Equity Fund. The fund's cornerstone investor is Natexis Private Equity, while other commitments came from a range of investors including Fondamenta (managed by State Street Global Advisors), CNP Assurances, Henderson Private Capital and a “significant” number of Italian high net worth individuals and family offices. The fund, which is targeting a final closing of €110 million by the end of April 2004, will focus on small and mid-cap buyouts in the North and Northeast of Italy, particularly in the industrial triangle of Milan-Padua-Bologna.
HUNGARIAN FUND POSTS €31M FIRST CLOSE
Euroventures Hungary III, a fund targeting the growing Hungarian private equity market, has posted a first closing at €31 million ($39 million). The fund aims to close at a maximum of €75 million in the summer, investing in expansion, development, growth and buyout opportunities in Hungary and other Central European countries. “We are pleased to have been part of the process of facilitating Hungarian institutional investment in Hungarian private equity as an asset class which offers diversification for fund managers and is widely held by longterm institutional investors in Western Europe,” said Andras Geszti, Euroventures' managing director.
CAPRICORN TO RAISE IMEC TECH FUND
Capricorn Venture Partners is planning to raise between €40 million and €60 million ($75 million) for the IMEC Technology Fund (ITF), launched alongside IMEC, a research centre based in Leuven, Belgium. Capricorn said it would raise the capital from local and international investors, and plans to hold a first close towards the end of the third quarter of 2004 at around €20 million to €25 million, allowing ITF to start investing. “We see ITF as an effective platform that will help young growth companies in bringing IMEC's technology to the market,” said Jos Peeters, managing partner of Capricorn Venture Partners.
EI'S FUND V HOLDS €200M FIRST CLOSE
closing of its new €300 million ($380 million) fund, Polish Enterprise Fund V LP. The fund, the largest private equity fund raised to date in Central Europe, will make investments ranging from €3 million up to €45 million. “Polish Enterprise Fund V includes new investors to the region as well as investors experienced from our previous funds. Their decision to join us in PEF V confirms EI's track record and Poland's attractiveness for investors. The first investments of Polish Enterprise Fund V will be made in the next few days,” said Jacek Siwicki, managing partner of Enterprise Investors.
€100M FIRST CLOSE FOR MITTELSTAND FUND
Argantis, a new fund aiming to take advantage of opportunities in Germany's Mittelstand segment, has raised €100 million ($125 million). The firm, which aims to achieve a final closing of €200 million by the beginning of 2005, will target medium-sized family-run businesses and corporate spin-offs in Germany as well as Austria and Switzerland. It will invest between €10 million and €30 million of equity in transactions worth between €30 million and €100 million. “We think this is an attractive market segment because it does not have the capital overhang you see in the large buyout market,” said Michael Hildisch, managing director of Argantis. He estimates that the firm will have at least 100 investment opportunities a year to choose from.