Vision Capital, the London-based secondary direct investor, has completed the syndication of Vision Capital Partners IV LP, a partnership that controls most of an investment portfolio previously owned by CS Structured Credit Fund, a fund controlled by investment bank CSFB.
Vision Capital led the acquisition of the portfolio for an undisclosed sum in February 2004, and was joined in the deal by Goldman Sachs Vintage Funds and funds managed by Landmark Partners. It has now introduced five new investors to the partnership: Paul Capital Partners, Unigestion, AIG Retirement Services, the Broad Foundation, a private US-based endowment, and an unnamed investor that does not disclose its activities.
“We are delighted to welcome further leading and sophisticated investors into Vision Capital Partners IV, sharing our view of the significant potential for adding value through secondary direct portfolios,” said Julian Mash, chief executive of Vision Capital. “Our investor base now includes both North American and European investors and encompasses fund of funds investors and charitable foundations as well as our established base of leading secondaries investors.”
The portfolio comprises controlling stakes in Avebury Taverns, a 700-strong UK tenanted pub operator; Elegant Hotels Group, a chain of five luxury hotels in Barbados; Roadchef, a motorway service station operator; Resource Partners Group, a UK financial services company; and Cabot Financial, a purchaser of under-performing consumer debt.
Secondary direct transactions, also known as synthetic secondaries, involve acquisitions of entire funds or portfolios by bespoke investment partnerships. The investors will then work with the underlying companies to prepare them for possible exits. A conventional secondaries investor will typically acquire an interest in a fund and not become directly involved in the underlying companies.
“What we do is good for companies and their management teams: we pay fair prices and we are not bottom fishing,” said Mash.
Last year, Vision Capital acquired a portfolio of four companies from Morgan Grenfell Private Equity in a deal reported to be worth around €100 million. Three of these companies – Deloro Stellite, Abrasive Technologies and AB Cerbo Group – have been refinanced since the acquisition, according to Mash.
Vision Capital was founded by Mash, the former deputy head of European investment banking at Smith Barney, in 1997. Since then, it has completed over 20 transaction and advisory assignments including ten private equity and portfolio company transactions.