Switzerland-headquartered asset manager Unigestion has held a first close on its debut dedicated direct investment fund, according to a statement from the firm.
Unigestion Direct Opportunities 2015 (UDO 2015), which officially launched in the last quarter of 2015 and is targeting €200 million, has received commitments in excess of €100 million from both new investors and existing Unigestion clients. LPs in the fund include the North East Scotland Pension Fund and Clwyd Pension Fund.
The vehicle is expected to hold a final close in the second half of the year.
The fund will look to partner with sector specialists to make minority investments in 12 to 15 privately-owned companies around the world which operate in the mid-market and have an enterprise value of less than €1 billion, the firm said.
“These [investments] are sometimes co-investments alongside fund managers with whom we’re invested, but it’s also investing alongside specialist investment partners even if we don’t have relationships with them,” Paul Newsome, head of investment management, private equity at Unigestion, told Private Equity International.
“We call it a direct fund as opposed to just a co-investment fund because the deals we are doing are not only co-investments offered in a typical fund structure, but can also include deals completed with family offices and entrepreneurs. On some occasions, through our network, we source the transaction and then bring on specialist investment partners to do the deal alongside us.”
Unigestion has been making direct investments from its separate accounts and through its secondaries funds for more than 15 years.
“Despite having completed direct deals since the late 1990s, this is the first time we’ve raised a dedicated vehicle, and it’s really because we were getting excess capacity in the deals that we were doing for our programmes. We knew we could invest more in these deals, so it made sense to raise a [dedicated] fund,” Newsome said.
“Our existing clients very much like these kinds of investments because it gives them more concentrated exposure to attractive, high growth companies whilst obviously you also get the benefits of no fee and no carry.”
UDO 2015 has already completed two investments. The first is in UK-based oil and gas company Zennor Petroleum, in which it invested alongside Hong Kong-headquartered sector specialist Kerogen Capital. Zennor specialises in the appraisal and development of hydrocarbons in the North Sea “where there currently exists an opportunity to buy multiple high quality assets at very attractive prices,” according to Unigestion.
Since the initial investment Zennor has acquired First Oil & Gas, a subsidiary of First Oil Expro, a UK oil and gas producer that had entered into administration.
The second investment is in BioreclamationIVT, a US-based provider of biological products used by life sciences and pharma companies in drug discovery research.
Unigestion partnered with US lower mid-market sector specialist Arsenal Capital on the transaction.
“We’re focusing on companies which benefit from long-term trends, and that does lead us to certain sectors which we think are more attractive than others such as financial services, energy sector, healthcare sector, and certain sub-sectors within technology,” Newsome said.
“We’ll only do a deal when there is a strong specialist investment partner investing alongside us. That also tends to lead us to these various sectors where we see the best opportunities.”
As at 31 December 2015 Unigestion has assets under management of £12 billion (€16.3 billion; $17.7 billion), 94 percent of which is managed on behalf of more than 270 institutional investors and 6 percent on behalf of high net worth families. Half of its assets are managed through segregated mandates.