EQT Partners, the Nordic buyout group, has surprised the market with an early return to fundraising before any exits from its most recent fund.
The firm is marketing a €3 billion fund just two years after closing its €2.5 billion fund EQT IV. It is aiming for a first close of the new fund at the end of August, according to marketing literature, and a final close by the end of the year, according to one fund of funds manager.
One pension fund investor, who met EQT on its road show recently, said: “Even if you are a fan of EQT, there is a good chance you will struggle to find an allocation for them given how recently they were in the market.” However another investor said this was more a structural issue for funds of funds and generally investors were used to funds coming back to market quicker.
The pension fund manager said some investors were also concerned the current fund was highly concentrated in too few large deals. “EQT IV has made just seven deals and three of the deals account for half of the fund. Potential backers are worried about the concentration of companies,” he said.
The firm has made some sizeable investments with EQT IV in deals such as the €3.3 billion take-private of Gambro, a Swedish healthcare company, the €1.6 billion acquisition of MTU Friedrichshafen, the heavy engines group, and ISS, the cleaning company it bought with Goldman Sachs for €3.1 billion. The fund is yet to complete a full exit, although BTX Group, a Danish clothing wholesaler, is close to being recapitalised, according to an investor in Fund IV.
The pension fund manager also said some investors had noted that the firm was declaring an intention to do more mid-market deals with the new fund, as opposed to just large LBOs.
However, another investor said EQT's investment thesis had always been to target both mid-market deals and large deals and at different points in the industrial cycle its funds would be weighted more towards large deals. He said the firm's industrial approach to buyouts, inspired by cornerstone investor the Wallenberg family, a Swedish industrial dynasty, meant EQT could do more with the opportunities it sourced. He said: “The firm doesn't do club deals and its style of industrial ownership means it can step up to the next level (of deal size) as need be.”
He said the firm was planning to hold a first close on investors ready to sign cheques, and to address new investors and any others with issues about the fundraising that needed detailed examination later in the year.
EQT and its placement agent MVision declined to comment.
PERMIRA CLOSES WORLD'S LARGEST FUND
Permira, the European large-cap buyout group, has leapfrogged long-established US rivals to close the world's largest fund on €11 billion ($14.1 billion). However its efforts are expected to soon be eclipsed by Blackstone, KKR and Texas Pacific Group. Permira has held what industry insiders commonly refer to as a ‘dry close' on the new fund: according to a source close to the firm, Fund IV will not begin to deploy any capital until Fund III, the €5.3 billion fund closed in 2003, is fully invested towards the end of the year. Until then, limited partners in Fund IV will not be charged a management fee.
INVESTORS FLOCK TO BABSON MEZZ FUND
Babson Capital Europe, one of Europe's largest leveraged loan managers, has held a final closing of its first dedicated European mezzanine fund, Almack Mezzanine I, at €800 million ($1 billion). The fund's close coincides with a change in sentiment to mezzanine pricing, according to Ian Hazelton, the firm's chief executive. He said: “We are at a turning point. One or two deals are not clearing and the spreads are creeping down. Pricing is settling at a level over 900 basis points. But there is a huge variety of risk profiles. Some you would want 1200 points over, some 900.” The fund will target both large and mid-market mezzanine investments in the UK and continental European markets.
LSP PASSES TARGET WITH €150M CLOSE
Life Science Partners, an Amsterdam-based venture capital firm, has held a final close on its third fund with €150 million ($191 million) of commitments, beating its original target of €120 million. Previous investors in LSP funds including the European Investment Fund (EIF), Residex and DSM joined new limited partners Credit Suisse, Swiss Re Private Equity Holding, Proventure, SR1, Foreign and Colonial, Finnish Industry Investment and VGL Investment Partners. Triago, Matrix Private Funds and Talamore Group acted as placement agents.
TDR CAPITAL SECOND FUND CLOSES ON €1.75BN
TDR Capital, the UK private equity firm, has held a first and final close of €1.75 billion ($2.24 billion) on its second fund. Blair Thompson, who moved from a partner position at law firm SJ Berwin to the role of chief operating officer at TDR Capital earlier this year, said that marketing for TDR Capital II began at the beginning of March. Lazard acted as placement agent on the fundraising. SJ Berwin provided legal advice. Thompson said that all investors in TDR Capital's first fund, which raised €550 million in 2002, committed to Fund II.
CINVEN GRABS €6.5BN FOR FUND IV
Cinven has closed its fourth fund with total commitments of €6.5 billion ($8.26 billion). The firm said it received commitments from more than 100 international institutions. More than 90 percent of investors in the €4.4 billion third Cinven fund, raised in 2002, re-invested in the latest fund, with a number of significant new long-term investors joining the list. Fund III had returned 100 percent of invested capital to investors from just three exits out of a total of 18 investments by the end of 2005.
GENERALI GROUP LAUNCHES €2.7BN FOF
AMB Generali Private Equity, the private equity arm of Italian insurance business Generali Group, has launched a fund of funds. The Generali Group itself had invested €175 million ($220 million) in Generali Global Private Equity by February of this year. The company said that commitments had come from ten insurance companies of the group, including four French investors and Generali Austria. Marketing to external investors will begin once the vehicle has “an appropriate track record”, according to a release.
CRÉDIT AGRICOLE PE IN TWIN FUND LAUNCH
Crédit Agricole Private Equity has launched two new venture funds with the intention of doubling its annual investment to €3 billion of funds under management. It has raised €100 million for Capenergie, the first French venture fund dedicated to renewable energies. A cornerstone of €70 million came from the bank's coffers. It has also said it is looking to raise €400 million in equity and quasi-equity financing for Meridiam Infrastructure, a fund targeting France's burgeoning private-public partnership market for infrastructure investment.
EVCA: BOOM PERIOD FOR PE RETURNS
The European Private Equity and Venture Capital Association (EVCA) has released final performance figures for 2005 showing that, since 1980, the European private equity industry has returned 10.3 percent, net of management fees and carried interest, with buyouts and venture capital returning 13.7 percent and 6.3 percent respectively. In terms of top quartile performance, buyouts returned 31.8 percent and venture funds 17.1 percent over the 26-year period. The shorter-term indicators show that, over a 10-year investment horizon, returns for all private equity funds saw a modest increase to 11.4 percent in 2005 from 10.8 percent in 2004. Buyout funds registered 10-year returns of 14.3 percent, while venture funds measured 6.4 percent.
BANK OF IRELAND PARTNERS WITH PAUL CAPITAL
Bank of Ireland has established a joint venture with Paul Capital Partners, a US private equity specialist, to provide private equity fund of funds products and advisory services to investors. The Irish bank said the move was another step to a diversified portfolio of investment boutiques. Paul Capital is looking to build on the bank's distribution and to expand its fund of funds offering. The new joint venture will be called Paul Capital Top Tier Investments and will be based in San Francisco, California. Bank of Ireland Group has paid $25 million in cash for a 50 percent share in the joint venture and may increase its shareholding up to 70 percent no earlier than 2008 on a pre-agreed basis.
PARTNERS CLOSES €279M EUROPEAN BUYOUT FUND
Partners Group, a Swiss-based alternative asset manager, has held the final closing for Partners Group European Buyout 2005 at €279 million ($352.5 million). The fund has an exclusive focus on European small- and mid-cap buyout partnerships and direct investments. It has already committed €114 million to nine European buyout funds. Among the limited partners participating in the fund were banks, insurance companies, family offices and pension plans from the US, Europe and Asia/Mid-East.
HITECVISION CLOSES FUND IV ON $300M
Norwegian energy-focused independent private equity firm HitecVision Private Equity has held a second and final closing on its fourth fund, HitecVision Private Equity IV, with $300 million (€239 million) of commitments from Nordic investors. The vehicle held a first closing on $283 million in January, significantly above its original target of $200 million. Limited partners in Fund IV's investor base included HitecVision itself, Argentum Fondsinvesteringer, Nordea, Vital, Tredje AP-Fonden (AP3), Gjensidige, Storebrand, KLP Forsikring and several family offices.
CAPMAN RAISES €440M FOR FUND VIII
CapMan has held a final closing on its eighth buyout vehicle with €440 million ($554 million) of commitments, exceeding its original target of €375 million. CapMan Buyout VIII held a first closing on €312 million last November. Jerome Bouix, partner at Helsinki Stock Exchange-listed CapMan, said that there was a second closing of the vehicle with €400 million of commitments in April of this year. A total of 31 institutional investors made allocations to fund VIII, including 15 new investors. CapMan has in seperate news, reduced its holding in Access Capital Partners, the French fund of funds manager it founded in 1998. CapMan has sold 12.5 percent of its shares in Access Capital Partners to management for an undisclosed sum. The Nordic firm reduced its shareholding from 47.5 percent to 35 percent, with management holding the remainder.
GERMANY CONSIDERING DOMESTIC PE TAX
German business daily
NY GROUP RAISES $200M FOR SE EUROPE
New York-based private equity firm Bedminster Capital Management has held a first close of its Southeast Europe Equity Fund II (SEEF II) vehicle with $200 million (€159 million) of commitments. David Mathewson, managing director of Bedminster, said that the vehicle had an original target of $200 million and will have a second closing “in the near future” but declined to provide a new target size or final close date for the vehicle. Bedminster Capital Management became independent of Soros Asset Management in 2004 when the parent company spun out its private equity, real estate and credit divisions.
NVP CLOSES $275M TECH SPIN-OUTS FUND
Venture capital firm New Venture Partners (NVP) has held a first and final close on its fourth vehicle, NV Partners IV, with $275 million (€215 million) of commitments. Harry Berry, partner in the Ipswich, UK office of NVP said that the firm began marketing fund IV a year ago with an original target of $200 million.
NVP was established in 2001 through London-based secondary specialist Coller Capital's $100 million management buyout of Lucent's New Ventures Group incubator.
PARTNERS AND ACCESS BACK IDG SPIN-OUT
The management team of IDG Ventures Europe, the European venture capital arm of US-based IT media group International Data Group, has spun out from its parent company and renamed the business Acacia Capital Partners. Swiss-based alternative investment specialist Partners Group and French fund of funds investor Access Capital Partners backed the buyout with an undisclosed sum of capital. The firm will manage the $100 million (€78 million) IDG Ventures Europe fund, which has now been renamed Acacia I.