Better Capital partners Irish pension

The Jon Moulton-led firm and National Pensions Reserve Fund of Ireland have earmarked €100m for Irish turnarounds.

Better Capital has teamed up with the National Pensions Reserve Fund of Ireland (NPRF) to invest in Irish distressed businesses by setting up a €100 million turnaround fund.

“The Irish market doesn’t really contain an institutional style turnaround player. As Ireland has quite a lot of troubled companies there is clearly a gap [in the market], Jon Moulton told Private Equity International.

“Ireland has its fair share of zombie companies, as has the UK, many of which require an injection of new strategy, new management and new money,” he said. The JV is likely to make investments between €10 million and €50 million, but Moulton warned “it’s hard to give a proper size in turnaround investing as firms sometimes buy enormous companies for next to nothing”.

The joint venture will be operated through Better Capital Ireland, a Guernsey limited partnership, and invest on a deal-by-deal basis, according to a statement.

Ireland has its fair share of zombie companies, as has the UK, many of which require an injection of new strategy, new management and new money

Jon Moulton

The NPRF, a €14 billion social welfare and public service pension fund, has committed €50 million. Better Capital’s BECAP12, a £170 million 2012 vintage, will commit 51 percent of the investment into each transaction and NPRF will provide the remaining 49 percent.

Apart from investing £17 million in Calyx, an IT provider in the UK and Ireland, in September 2010, Better Capital has never invested in Ireland before. The firm will be setting up an office in Dublin this month.  

The cooperation between Better Capital and NPRF makes sense for both parties, Moulton added. “Teaming up with NPRF gives us very substantial credibility in the market where actually, although we have only done one Irish deal, we are a market leader because there are very few Irish deals being done,” he said, adding that NPRF was not an investor in the BECAP12 fund.

“NPRF very much wants to have a focused activity and is getting an economically sensible deal. The objective is clearly not just to make money for the fund but also helping the Irish economy,” he added.  

Setting up these joint ventures with limited partners is a “steadily increasing trend”, he said, although Better Capital is unlikely to set up similar structures this year, he added.

The number of separate managed accounts is growing, particularly in the US. Last year, The Blackstone Group formed a $500 million separately managed account with the California Public Employees’ Retirement System. In 2011 it also formed a $1.5 billion partnership with New Jersey’s state pension. In addition, the Teachers’ Retirement System of Texas formed accounts in 2011 with Kohlberg Kravis Roberts and Apollo Global Management, committing $3 billion to each firm, PEI reported at the time.