December/January 2006 issue

News analysis

A victimless crime?

The demise of Thomas H Lee Partner’s August 2004 investment in Refco, the big American futures broker, thanks to the well-covered fraud perpetrated by Refco’s recently departed CEO Philip Bennett, has generated a lot of comment. Thomas H Lee Partners is in the midst of trying to raise a new fund and will have to go to investors with a return IRR in the mid 30s rather than mid 40s, as it would have done pre the Refco collapse. But a mid 30s IRR still puts Thomas H Lee Partners in the top quarter of private equity funds so this hardly seems something to get overly hot under the collar about. It’s the firm’s sixth fund that houses the Refco investment and the firm has strong performance of previous funds to fall back on as well. Lisa Bushrod reports.

Managers wanted

Management is the key to successful university spin-outs, says the British Venture Capital Association (BVCA) in a new report, but it is also the most challenging to deliver. Tom Allchorne looks at how spin-outs can attract and keep high-level entrepreneurs.

Pension Regulator plans

Since the summer break the pensions issue has dominated the news and comments pages of much of the media. At the end of October the Pension Regulator, Tony Hobman, decided to weigh in with the publication of a consultation document outlining proposals covering how the body will intervene in the corporate pension crisis. Tom Allchorne reports.

GIPS make French PE debut

French private equity managers AGF Private Equity and AXA Private Equity are the first firms in France to have their performance figures audited according to the Global Investment Performance Standards (GIPS.) The standards have so far had slow uptake from the private equity community across Europe. Angela Sormani reports.

Renewed interest in Euro venture

In October the French Technology Fund-of-funds (FTF) was launched with €150m and a couple of months earlier Germany’s Wellington Partners reached final close on its third fund, raising €150m compared with its original target of €120m. While not dramatic in themselves, the successful launch of these two new funds could signal the early sparks of renewed interest in European venture really for the first time since the crash.

Triple-track targets smaller businesses

The dual-track process has been around for some time designed to attain the best possible exit price for a private equity portfolio company. A triple-track offering is now being touted, which combines the traditional dual exit strategy approach of trade sale or secondary buyout with the alternative possibility of transition to IPO. Triple-track is being targeted at smaller private equity-backed companies, primarily in the lower mid-market. Angela Sormani reports.

News highlights

Noble acquires Sitka

Royal London renames

Corbett Keeling in tech advisory JV

French insurers looking to invest €6bn


BoS backs Braveheart

Seed through early stage

G2i helps London start-ups

Online exchange launches

VCTs raise FSA concerns

Fund news

Russia attracts funds

The last month has seen the launch of two private equity funds targeting Russia and the Commonwealth of Independent States (CIS) region. The East Capital Explorer Financial Institutions Fund and the Russia New Growth Fund both look set to offer investors exposure to a region that traditionally carries a range of regulatory and practical hurdles for foreign investors.

Quick view


Alto raises €50m

Standard Life tops €1bn

Candover raises €3.5bn

Doughty real estate 1st close

North East gets funds

Close seeks £35m

Hambro closes fund 2

INCOM III seeks €100m

CapMan Buyout VIII first close

SG targets Eastern Europe

Franklin Templeton targets real estate

Platina raises €27m

East Capital fund launch

Exit news

3i sells Seventies investment

3i has made a 20x return with the £81m sale of its minority stake in William Wilson. Tom Allchorne looks at how 3i is tidying up its portfolio.

Quick view


BancBoston Capital sells Unity Brands

Bridgepoint doubles Panreac investment

3i makes gain on William Wilson

3i makes 3x return on ERM

EQT sells Bewator to Siemens

Summit acquires CBI

ISIS EP makes gains for investors

GIMV sells Ominstor

Barclays exits Warner Howard

Funcom poised to float

RBS sells insurance houses

3i exits PL

Bridgepoint exits theatres

3i sells Interbrandpro

CGS exits Bourdon-Haenni

Nordic Capital sells Ahlsell

Bridgepoint gets out of Kaffee Partner

Imperial sells Toumaz

CombinatoRx IPO for GLSV

SGAM makes gain on Microlink

IK buys Kwintet from Axcel

Equita sells Neumayer Tekfor Group

KKR acquires Vestar’s Selenia

EI exits Orange Slovensko

AXA Private Equity sells Tokheim

Moliflor Loisirs goes to Bridgepoint

MB Funds exits A-Inspection

BancBoston sells Kongsberg shares

PPTH sale delayed

SThree floats


Israeli venture dips

SCM reviews PE terms and conditions


Lafond leaves Add

Beringea promotes

CBCM appts

O’Melveny hires

CalPERS chief to Hermes

Hitec hires

Hotbed hires

SG appts

BioMedinvest adds

Phoenix promotes

CapMan promotes

3i Italy MD

Corsair appts

BrainHeart hires

ICG new MDs

Paul Hastings hires

PwC adds

Cipio builds

Royal London renamed

Pinsent award

Fidelity appts

Palamon recruits

Platina appts

SJ Berwin adds

Benchmark hires

Partners move


LP Corner

Taking a view: Feri

German venture looks to the future

The years of consolidation, of poor deal flow and weak exit markets are over, according to German VCs. Now the LPs just have to realise it. Tom Allchorne reports on how Germany is trying to pull itself out of the doldrums.

Mezzanine moves East

Mezzanine demand and supply is soaring in the EU accession countries. As more private equity firms start to look east for investment opportunities, buyouts are flourishing while, with GDP rising much faster than in Western Europe, the need for growth capital is soaring. Joanna Hickey reports.

Legal & Regulatory

Inheritance tax

Handling inheritance tax when bequeathing carried interest in private equity is not always straightforward and this can be a crucial area given the potentially large sums involved. So what’s the best way to ensure that the taxman takes the minimum in such situations? Patrick McCurry reports

Real estate is hot!

When Keith Breslauer took Patron Capital Partner’s second real estate private equity fund into the market to show to institutional investors at the start of last year, he was expecting, he says, that “it would be a year of hard work.” He was wrong, six weeks into the fund raising he had all the money he needed and a whole lot more besides, two-and-a-half times more to be precise. Breslauer did the smart thing; he took the money and signed all the legal documentation that meant his investors would not see their money drawn down nor would they be charged any fees until he was ready to invest it. This began in early 2005 after Patron had committed what remained of its first fund in the remainder of 2004. Lisa Bushrod reports.

Insuring private equity

Drawing clear lines is not simple when insuring a private equity firm. In addition to the personal exposure GPs face in the capacity as a director or officer of a portfolio company, this position can also be considered a professional service to the fund’s investors and the portfolio companies. And so claims can include a variety of allegations against the fund, the manager and the individuals themselves as principles, investment professionals, directors and officers. Angela Sormani reports.

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