The private equity group of Edinburgh-based insurer Standard Life has closed European Strategic Partners II (ESP II), its second dedicated fund of funds. Launched in October 2002, the fund raised €1.09 billion ($1.38 billion) from investors in the UK, continental Europe, North America, Asia and the Middle East.
Standard Life Investments (Private Equity) now has €2.4 billion of capital under management, making it one of the largest fund of funds managers active in Europe.
The group said 53 per cent of commitments to ESP II came from some 40 institutional clients. The remaining capital has been provided by Standard Life. Specialist law firms SJ Berwin and Debevoise & Plimpton advised on the formation of the fund.
ESP II will invest the bulk of the capital in medium- and large-size European buyout funds and is mandated to use up to €240 million for co-investments. According to Jonny Maxwell, chief executive Standard Life Investments (Private Equity), the fund can also invest a significant amount of capital acquiring secondary interests in private equity partnerships.
Commenting on the fund’s prospects in the current investment climate, Maxwell said in an interview: “We expect the buyout market to get busier throughout 2004 and busier still in 2005. There will be more corporate interest in M&A than there is now, but trading between private equity firms is also going to increase further as funds reach the end of their investment cycles and choose to sell assets on to other managers who can take them to the next level.”
Maxwell also said closing ESP II above target was achieved in an “extremely difficult environment when a number of our competitors have closed down or been acquired having failed or struggled badly in their fundraising.”
ESP II has already invested over €200 million in funds managed by leading European general partner groups including Permira, Barclays Private Equity, Charterhouse Development Capital and Graphite Capital of the UK, BS Equity Partners in Italy, Capvis Equity Partners in Switzerland and Nordic house Altor Equity Partners.
Completed co-investments are a €10 million commitment to the Candover-led buyout of hygiene product maker Ontex; a €15 million interest in Danske Traelast, the Nordic builders merchant acquired by CVC Capital Partners; and a €15 million investment in Debenhams, the UK retailer, also with CVC.