The wait is finally over for Morgan Grenfell Private Equity (MGPE). It now falls under the management of Deutsche Bank‘s private equity arm, DB Capital. November 8 was the last day for investors to reject the move. The majority of investors was pleased with Deutsche Bank’s proposal. To reject it, at least 75% of investors would have had to vote against the proposal.
The incorporation of the two businesses marks the end of an on-going saga with regards to the future of MGPE, which had been fighting to gain its independence. In July this year its long-awaited management buyout was blocked. This resulted in the departure of Chief Executive Graham Hutton and raised investor concerns with regards to the future of remaining executives. A 90-day consultation period with investors in the fund regarding MGPE’s options was activated in mid-July.
Deutsche Bank was then said to have gone out with an amended proposal to appease some third party investors in the fund who were still voicing concerns over management fees and better profit-sharing arrangements for MGPE executives. There was also concern as to what DB Capital would do to retain existing MGPE personnel and issues with the current portfolio and future investments.
Now it is a case of merging the MGPE portfolio with DB Capital’s business. All management will be brought over to DB Capital. This includes a total of six directors, and no redundancies have been made so far.
The initial plan is for MGPE directors to continue working on their portfolio, looking at the opportunities available for those companies – whether it be follow-on investments or exit opportunities.
MGPE’s most recent EURO1.5 billion fund, Deutsche European Partners IV, is 85% invested. It will not make any new investments, but there will be follow-on funding available for existing companies in the portfolio.