London-listed private equity investor SVG Capital expects to pick up the pace of its co-investment activities in the latter part of the year.
“We would like to do more,” SVG head of private equity fund investment and co-investment Robin Winning told Private Equity International. “The rate will hopefully build as we make new manager commitments, which slowed last year.”
The firm, which has four co-investments thus far, is targeting 10-12 with existing and new managers.
In terms of GP relationships, SVG is targeting eight to 10 with a commitment size of $100-200 million. “We have six and we are looking to continue to build that. There are good opportunities in the US and Europe,” Winning said, adding that there was no particular time frame in which to reach its commitment or co-investment targets.
The firm is also eying private equity-related debt. “Private debt is something we have been thinking about for some time and there are a range of options,” said Winning. “It will remain a small part of our strategy. We have done a small amount in the past and this would be accretive.”
The firm expects to make “two or three” new fund commitments this year, it said in a results presentation for the financial year ending 31 January 2016.
SVG made one new fund commitment last year of $100 million to US mid-market vehicle AEA Investors Fund V. It also co-invested in US-based eye glasses retailer Eyemart Express, to which is it also exposed through its commitment to FFL Capital IV.
Since 2012, when SVG launched its new strategy to diversify away from investing primarily in Permira funds, it has invested in Cinven’s Fifth Fund, Clayton, Dubilier & Rice IX, CCMP Capital Investors III, and Permira V, a 2014, €5.3 billion fund, a well as AEA’s latest fund.
It has also made four co-investments: Eyemart Express; German IT software company TeamViewer, in which it is also exposed to through Permira V; US-based hardware distributor The Hillman Group; and Norwegian business software provider Visma, in which Cinven V is also an investor.
Since its strategy shift in 2012, SVG has delivered dramatically improved performance. Its pre-2012 portfolio, which represents 32 percent of its investments, generated a negative return of -1.0 percent last year, driven by share price movements of its quoted holdings and realisations, SVG said. Its post-2012 investments represent 36 percent of its overall portfolio and generated a 19 percent total return over the year, while its non-core assets, which represent 32 percent of the portfolio generated a total return of 24 percent.
The proportion represented by its pre-2012 portfolio will reduce once the two largest remaining investments held by Permira IV in NXP Semiconductors (Freescale) – which merged with NXP Semiconductors in January – and Platform Specialty Products (Arysta LifeScience), are realised, Winning said.
The realisations are expected to generate proceeds of £38 million ($54 million; €48 million), the firm said.