Schroders’ buyout arm doubles its profits

A strong performance by Schroders’ private equity division has aided the asset management’s company’s positive interim results, as the team continues fundraising for its fourth fund of funds.

Global asset management company Schroders has recorded strong results with a 40 percent increase in profits given an extra gloss by the doubling in profits at its private equity division in the first half of this year, according to its interim results.

Schroders’ results for the six months to 30 June 2007 showed profits had increased from £132.3 million ($267 million, €195 million) last year to £185.6 million this year, with its private equity profit rising from £17.7 million to £36.2 million.

A company spokesman said: “The private equity returns come from the book that is being run off from our investments in SVG Advisors and Permira’s funds.” These results are dependent on the profits the Schroder spinouts realised from the company’s legacy investments from Permira’s first and second European funds.

Schroders’ head of finance operations Don Cathcart said:  “Succesful exits include Ferretti, Marrazzi and Cortefiel while New Look remains in the portfolio.”  The majority of the returns received had been from carried interest although Schroders also had direct investments in the funds, he said.

Profits at Schroders’ asset management also rose by £36.4 million to £123.2 million and its banking arm was up £4.7 million to £15.9 million. The company has £137.6 billion under management up by £9.1 billion from 31 December 2006 and its interim dividend was up 1.5 pence per share on the same time last year.

Income on investment capital was £56.8 million in the first half, an annualised return of 15 per cent.

Schroders with FTSE 250-listed SVG Advisors held the first close in July of its fourth fund of funds at €200 million.  The company has €1.1 billion of funds of funds under management and a capacity of up to €1.5 billion.

Its first two funds are fully invested and have reported strong performance and asset growth, with material distributions from their underlying portfolios. Schroders third fund is still in its investment period.