Lance Whitehead, a former fundraiser with Dresdner Kleinwort Capital and Bank Indosuez, has set up Cygnus Capital, a UK-based placement agency that will target Europe and lucrative fundraising opportunities across the Middle East.
Cygnus has already secured mandates from US-based Energy Investors Fund, and the UK mid-cap specialist, Kleinwort Capital, both of whom he worked with until earlier this year.
Whitehead’s previous work in the Gulf Region included a $45m fundraising for Wasserstein Perella’s US Equity Partners. More recently he has completed a $26m private placement for a new Middle-Eastern satellite and news television network, and he is working on a E120m private placement for an Arab government that is acquiring assets in the European oil and gas sector.
Whitehead, who has had experience of the Middle East fundraising market since the mid 1990s, and who speaks Arabic, believes the region offers fund managers an excellent opportunity to ‘top-up’ successful fundraising efforts. “The Middle East is a great market for fundraising, due to its counter-cyclical nature and the large pool of capital that has been committed to private equity. Middle-Eastern institutional investors have been involved in alternative investing for as long, if not longer, than many of their European counterparts. Gulf investors favour managers that have successfully raised funds in their home markets before approaching the Middle East.”
In addition to the firm’s work in the Middle East, Cygnus Capital will also co-ordinate European fundraising. “The more transparent nature of the European market makes it possible to get up to speed more rapidly,” said Whitehead, who already has strong links with investors in the UK, Switzerland, Denmark, France, Benelux and Germany.
Whitehead enters a competitive market for placement agents and advisors, with an increasing number of firms positioning themselves as placement service providers. Assisting general partners in their fundraising is lucrative business, with placement agents being able to charge up to four per cent of total funds raised in fees.
“It is a relatively competitive market at present. However, management teams now acknowledge the need for placement agents, and the demand for placement services has increased in recent years,” said Whitehead. In addition to the firm’s current mandates, Cygnus is also close to winning another two, from major European firms. “It is important to be selective about who you work with. Cygnus chooses managers against LPs’ selection criteria, to optimise the chance of success.”
Market practitioners estimate that there are currently over 100 fundraising consultants competing for GP mandates, making it difficult terrain to negotiate in the current climate, especially for new entrants who have yet to build a track record of successfully placing limited partnership interests with investors.