News: Funds

NewMedia Spark reduces staff
NewMedia Spark, the London-based technology investment boutique, has tightened its belt in response to what it continues to perceive as ?extremely difficult market conditions.?

As part of a results announcement for the six months to November 30, the firm said it had reduced its headcount from 55 to 35 fulltime professionals after cutting jobs in London, Stockholm and Berlin. The reduction is to reduce operating costs from over £7m per year to £4.5m. Plans to open offices in India and Spain were put on hold.

The firm also said it had written down the value of its investment portfolio of 71 companies by £37.7m (€60m). Total net assets stood at £161.3m, of which £35m was held in cash. Five investee companies were closed during the period, and another four valued at nil, with Spark saying it had lost confidence in their ability to generate a return on investment.

Michael Whitaker, CEO, commented: ?Spark remains in a fundamentally sound position. We are one of the few quoted companies specialising in VC investment in the TMT sector to have emerged from the extremely challenging market conditions of the last eighteen months.?

During the period under review, Spark acquired investments firms Spütz and GlobalNet. Taking control of the former gave the firm a 1 per cent stake in Deutsche Börse, which Spark is expected to sell for around £20m.

TVM life science fund oversubscribed
Techno Venture Management (TVM), the German-US venture capitalist, has closed a new biotechnology fund with €336m of commitments, well above its target of €250m.

TVM said the fundraising had been difficult in the current climate, but the result shows that life science is still held in high esteem by institutions who have otherwise turned their backs on venture capital propositions. Key investors in TVM V Life Science Ventures include Dutch private equity house NIB Capital, which has a 10 per cent interest, German insurer Allianz, KfW and TBG, the private equity subsidiary of Deutsche Ausgleichsbank.

Helmut Schühsler, TVM's managing partner, said: ?We believe that life science investing will continue to be very profitable for investors who have a strong franchise in the sector, a deep understanding of the industry, patience and a clear commitment to creating value for shareholders?.

Commenting on the recent surge in demand for life science investment opportunities, Schühsler said many investors mistakenly thought of biotechnology as a safe haven. ?It is a difficult sector and it hasn't got any easier, but many VCs have decided to switch out of IT and back into life science,? he said, questioning the wisdom of such moves.

TVM V Life Science Ventures is the firm's first sector-specific fund. A dedicated IT and communications fund is to be raised next year.

$40m biotech fund launched
Esquire Capital Holdings, a Luxembourg-based venture capital firm, has launched a $40m life science fund to invest in international biotechnology and life science companies.

Esquire expects to raise around $30m from institutions and the remainder from private investors. Gerard Iwema, chairman and executive director of Esquire, said he was confident about the fundraising because ?there are a lot of institutions willing to listen at the moment.?

Esquire will provide biotechnology ventures with up to $2m funding, and offer scientific and managerial support. The group is advised by public research organisations such as the French National Medical Research Institute and the National Centre for Scientific Research. The group will invest around 50 per cent of the money raised in Europe, with the remainder going as co-investments to North America and Asia.

White Williams to raise for CEE
White Williams Private Equity Partners, a New York based buyout firm, has launched the European Accession Fund LP, a $250m buyout fund that will invest in Central and Eastern Europe.

The fund will be looking to invest in buyouts of businesses with annual revenues of up to $100m. Target countries are the Czech Republic, Slovakia, Hungary, Romania and the Baltics.

Dave Williams, chairman and cofounder of the firm, said he picked the region because he was intrigued with the challenges of working in countries that are on the verge of joining the European Union. ?I saw what happened in Spain and how the country changed ? its policies, regulations and capital markets. The Accession fund is to cover the same changes in Central Europe,? he said.

?I am confident about the region because it is an area I have been interested in for many years ? it's familiar territory,? Williams, a former chairman of Alliance Capital, said. The firm currently has around 25 investment managers working in Vienna, Prague, Bucharest, Warsaw, Bratislava, and Bucharest. Earlier this year it acquired East Fund Management, a seven-year old private equity group with five funds focused on Central and Eastern Europe.

Axa closes $480m secondaries fund
Axa Private Equity has closed its second secondaries fund at $480m. The firm, which is part of Axa Group in Paris, raised $130m more than initially planned for the fund, a reflection of the strong demand that secondary players continue to attract from institutional investors.

Other secondaries specialists currently raising capital include Lexington Partners, the US firm which is raising a $2.5bn vehicle, and Coller Capital, the London-based firm that is out looking for $1bn in commitments.

Participating investors in Axa's new vehicle include Bombardier Pension Funds, the Caisse de Dép^t et Placement du Québec, the Wellcome Trust and Fondation of Québec City. A number of European insurance companies also invested.

All the investors that participated in Axa's first secondaries fund, a fully invested $220m vehicle that was raised in 1998, committed to the new fund.

Axa Private Equity has more than $4bn under management and offices in Paris, London, New York and Frankfurt. It invests in buyouts, venture capital and turnarounds and runs a private equity fund of funds business. It recently carried out an internal restructuring of its fund of funds and secondaries business which is understood to not have led to redundancies. Charles Flynn, who has built up Axa's fund of funds operation together with Sasha van der Water, recently left the firm to work for Deutsche Bank in New York.

Blackstone on target
The Blackstone Group, the New York based specialist investment bank and alternative asset manager, has held a first closing for Blackstone Capital IV LP, its latest global private equity fund. $4bn has been committed to date. UBS Warburg and CSFB act as placement agents for the fund.

Innova to raise €180m
Polish venture capitalist Innova Capital has launched its third venture capital fund for investment in its home market and across neighbouring countries in Central and Eastern Europe. Innova intends to raise €180m and close the fund in April 2002.

Hands' plans take shape
Fundraising is underway for Terra Firma Capital Partners II, Guy Hands' new €3bn private equity fund. Hands' former employer Nomura International is expected to make a major contribution. Merrill Lynch and Salomon Smith Barney have been appointed placement agents.

Cofiri looking for €215m
Italian merchant bank Cofiri has launched two VC funds with a combined target of €215m. The bank is raising a €200m vehicle to invest in early stage chemicals companies. A €15m fund is also in the market looking to biotechnology and new materials start-ups.

Unilever to launch VC fund
Unilever has plans to create a venture capital fund to invest in companies operating outside its core food and care business. The consumer goods group is in discussions with private equity firms about the project. Rival Nestlé launched a SFr200m (€136m) science and technology fund in September.

Pentech close to £20m target
Pentech Ventures, the early stage venture fund raised by Scottish house Penta Capital, has received a £5m investment from Scottish Widows, taking total capital raised to date to £17m. It is the first time that Scottish Widows has invested in a private equity fund.

CDC-Innovation past first closing
CDC-Innovation Partners, the Paris-based technology investment specialist and subsidiary of CDC IXIS Private Equity, has held a first closing for its third venture capital fund, CDC-Innovation 2001, with €102m secured and additional money in soft commitments already in position. The fund, which has been in the market since spring, is expected to close at €150m in 2002. It will participate in start-up, early stage and development capital transactions in telecommunications, software, micro-electronics and biotechnology.

Fifth Quester VCT launched
Quester, the independent technology VC has set a £25m target for its fifth venture capital trust, Quester VCT 5. The fund will invest across a broad spectrum of private companies including operations in the IT and communications, healthcare and life sciences sectors.

Fourth fund for JVP
Jerusalem Venture Partners (JVP) has closed its fourth fund at $400m. JVP IV will invest in early stage communications and internet infrastructure companies in Europe, the US and Israel.

The closing marks the first time that JVP, which recently opened an office in London, has capital earmarked for investment in Europe.

JVP IV has already participated in six technology investments worth $47m, investing alongside venture capital firms such as Battery Ventures, Apax Partners and 3i.

A number of existing investors in JVP have returned for this latest offering including funds of funds HarbourVest Partners and Adveq Management. Other limited partners invested in the firm include France Telecom, Axa Investment Management, and Merrill Lynch. JVP's first three funds, totalling $255m, are fully committed. The firm has offices in London, New York and Jerusalem.