Robert Tomei arguably knows more about the art of private equity investing than most. After all, Tomei, chairman of the investment committee of the Peggy Guggenheim Foundation and a board member of the Tate Museum and New York Museum of Modern Art, is currently helping to raise a private equity-style art fund with a target of between E200 million ($311 million) and E300 million.
Tomei is chief executive of Advanced Capital, a Milan-based firm which has raised two mainstream private equity funds of funds and is currently raising a third. But while these funds have invested in vehicles raised by the likes of The Blackstone Group and Permira, 60 percent of the capital raised by the AC Art Fund will be targeting works by contemporary artists, with 20 percent set aside for photography and another 20 percent for design. The fund will have a three-year investment period and a seven-year life.
In contrast with the larger buyout space, the art market appears to be suffering no lack of liquidity. Last year, public auctions of fine art globally generated total revenues of $9.2 billion. Says Tomei: “We think there is depth, breadth and sustainable secular growth [in the contemporary art market] due to the immense wealth creation process in place globally, and we feel that this additional liquidity in the market can accommodate a private equity-style approach. We can arbitrage deep inefficiencies such as lack of transparency, high transaction costs and information asymmetry.”
The fund will be jointly managed with Philips de Pury (PdP), the New York-based auction house and art dealership. Advanced Capital and PdP have teamed together previously to administer the Pisces Trust and Libra Art private collections. In this capacity, they have invested in 369 artworks with a total cost of $40 million and sold 182 with an internal rate of return of 22.8 percent.
Tomei says the fund has two target areas: “Our first target is upcoming hot artists that we can access as insiders and we can essentially act as market-movers for their works. In this case, we purchase when they are emerging and then sell when they become more established. Our second targets are artists whose talent is already well recognised but whose price for their works does not currently reflect their quality and relevance within the art world. We can help these artists to reposition themselves within the marketplace.”
CANADA PENSION LAUNCHES IN LONDON
The C$123 billion (E80 billion; $125 billion) Canada Pension Plan Investment Board has opened a London office from which to scout deals in its top-performing asset classes: infrastructure, private equity and real estate. It follows the opening of a Hong Kong office in February and launch of a London office late last year by fellow Toronto-based pension, The Ontario Teachers' Pension Plan. Alain Carrier will lead the private equity and infrastructure activities out of CPPIB's London office, while approximately six Toronto-based CPPIB investment professionals will relocate in the near future. Carrier joined CPPIB earlier this year from Goldman Sachs' London office, where he advised on high-profile deals including cable company NTL's merger with Telewest as well as NTL's takeover of Virgin Mobile, according to a 2007 article in UK newspaper The Daily Telegraph, which first reported Carrier's intent to leave the investment bank. The Canadian pension has been investing in Europe for more than seven years, but feels having a dedicated team in the region allows it to better monitor current investments and evaluate new ones.
BALDERTON CAPITAL LOSES ONE…
George Coelho has left UK-based venture capital firm Balderton Capital to join Good Energies, a renewable energy investment firm owned by COFRA, the holding company of the Brenninkmeijer family. Coelho will become head of the company's venture team as well as a managing director. He will also be responsible for European solar energy investments. A spokesman said Balderton would not be seeking a replacement for Coelho. Coelho was one of the team that originally set up Benchmark Capital Europe in 2000. In 2007, Benchmark's European team became independent from Benchmark's US team, becoming Balderton in the process. Good Energies has been growing rapidly in the last two years increasing its team from 6 to 65 and the number of managing directors from 2 to 10 during this time, according to a company spokesman. The firm initially invested in solar energy, but has branched out into wind, project finance and energy saving buildings, the spokesman said. The Brenninkmeijer family, which originally owned the retail chain C&A, is a large investor in private equity through its family office COFRA, which provides Good Energies with E350 million to invest annually. Good Energies has more than E4 billion under management.
…AND ADDS ONE
Meanwhile, Balderton Capital has hired former Emap executive Dharmash Mistry, bringing the firm's current number of partners to seven. Mistry will both help grow Balderton portfolio companies and seek new investment opportunities, leveraging his media, retail and consumer goods expertise. Prior to joining Balderton, Mistry spent eight years at businessto-business media group Emap in a number of executive roles including managing director of Emap consumer media and Emap performance. He was also part of the management team that sold Emap's consumer magazine business to H. Bauer for £1.14 billion in December 2007.
HATCHER GRESHAM SECONDMENT GOES PERMANENT
Dan Hatcher has left financial services firm Ernst & Young to join London-based mid-market private equity GP Gresham as an investment partner. He has been working for the firm since May 2007 on secondment and was part of the deal team that worked on the £110 million purchase of toothpaste maker Betts Global from a Permira-led consortium in October 2007. At Ernst & Young, Hatcher spent six years on the lead mergers and acquisitions advisory team and worked on mid-market deals including the sale of GE Commercial Aviation Training to Star Capital and the acquisition of Aspen Pumps by Inflexion Private Equity. Gresham recently paid £82.5 million (€104 million; $164 million) for Johnson Clothing, a company it has previously owned, as its parent company sought to deleverage.
MYNERS JOINS START-UP FUND
Synova Capital, a UK private equity fund focused on the lower mid-market, has appointed Paul Myners to chair its investment committee. Myners is adding to his private equity interests, which already include Englefield Capital, where he sits on its advisory board. He is also a member of the investment committee of Singapore's GIC, a significant investor in private equity. His appointment will add momentum to Synova's maiden fundraising, targeting £100 million (E125 million; $196 million) to invest in the UK lower mid-market in companies worth between £10 million and £50 million, which have been abandoned by private equity's ever larger funds. Synova held a first close last December on £70 million including a cornerstone investment from its chair Poju Zabludowicz, a Finnish billionaire and chairman of investment group Tamares. David Menton, one of the firm's managing partners, worked at Tamares for almost a decade, while Philip Shapiro, also a managing partner, was a senior executive at Phoenix Equity Partners.