AGF Private Equity, the French investor, has announced details of two new funds, AGF Innovation 3 and AGF Capital Investissement 2. AGF Innovation 3 is a venture capital fund focused on high tech French companies and AGF Capital Investissement 2 is an international fund-of-funds.
AGF Innovation 3 is the investor’s third FCPI (Fonds Commun de Placement dans l’Innovation), a fund structured to include tax incentives for investors similar to the UK’s Venture Capital Trusts. The fund aims to raise between EURO60 million and EURO70 million from individual investors by the end of the year.
Of this 60 per cent will be invested in innovative French companies specialising in business applications, systems software infrastructure, components and hardware for the telecoms and electronics sectors and biotechnology. The remaining 40 per cent will be invested a balanced portfolio of bonds and listed equities, to reduce the risk for investors and bring the funds in line with the returns expected by AGF’s customers.
The fund will be promoted by AGF Asset Management, AGF Private Equity’s parent company, which is the asset management subsidiary of Assurances Generales de France and Groupe Allianz.
AGF Private Equity launched its first FCPI in December 1999 and raised EURO29 million. It has already invested in 17 companies and made its first realisation. Last year the investor launched AGF Innovation 2, a EURO42.7 million fund that has made 12 investments. The company invested in just two per cent of the 650 companies from which it received proposals between September 2000 and June 2001. Christope Baviere, president of AGF Private Equity, said: “The best situation to be in at the moment is to have lots of cash. Cash is king but so is time. Today, unlike two or three years ago, there is no pressure to invest our funds fast and we take to time to do our due diligence thoroughly.”
In addition to AGF Private Equity’s VC experience the company launched its first fund-of-funds, which raised EURO40 million in June 1998. AGF Capital Investissement 2 is the successor to this fund and hopes to raise at least EURO50 million to invest in 20 funds. Baviere believes the fund’s simple structure makes it ideal for first time, or inexperienced, private equity investors.
Half of the fund’s commitments will be to buyout funds, 30 per cent to venture capital and the rest to generalist funds. Commenting on the selection process Baviere said: “For the best results you need teams that are fully independent and can make fast investment decisions. Teams need to have access to the best deals at the best prices and this requires a good local network. Most important of all is that they focus on a niche investment market.” Of the new fund 60 per cent will be invested in European funds and 40 per cent in American and Asian funds.
Baviere is positive about the French market: “Venture capital is gaining ground in the French investment community, among individuals and institutional investors. Private equity is increasing its exposure, even when times are hard.”