RBS and Merrill close VC units

RBS has closed its venture investment operation and Merrills its venture placement business on account of depressed market conditions.

A lack of activity at the development capital end of the private equity spectrum has persuaded two major banks to streamline their operations in the sector.


Royal Bank of Scotland has closed Royal Bank Development Capital, its smaller scale private equity unit which specialises in deals between £2m and £20m across all UK sectors. The business was established in 1993 and was originally part of UK bank NatWest which RBS acquired.


The bank has decided to cease involvement in deals below £10m in value and a number of senior bankers at Royal Bank Development Capital, including directors Duncan Cameron, David Lambert and Chris Gammon, have now left the unit, reports UK newspaper The Times.


According to the report, the bank will retain five members of staff to oversee the existing portfolio, including Robin Powell and Derek Gardner, but the bank will not make any new investments.


The unit has made total investments exceeding £350m, including the recent management buy-in at Aberdeen-based equipment supplier Hydrasun. The division had also participated in the 1997 buyout of Gala, which was recently sold to Candover and Cinven for £1.24bn.

Royal Bank of Scotland was not available for comment.


Meanwhile US investment bank Merrill Lynch has announced the closure of its European venture capital private placement unit, according to a report by Financial News. Gordon Dunn, head of Merrill Lynch’s private equity group based in London, has left and a number of other employees are moving to other roles within the bank. The bank has now ceased fundraising for early-stage technology companies in Europe.