Doughty Hanson Raising $3.2B Fund

European private equity firm Doughty Hanson is busy raising Doughty Hanson IV, a private equity fund focused mostly on buyouts and targeted for $3.2 billion. The firm started marketing the fund officially in November 2002 and hopes to hold the final close by year-end.

The new vehicle’s predecessor, Doughty Hanson III, has invested in 14 companies, 10 of which were buyout deals. The firm also invested in many different regions, 10 of the companies it invested in were in the U.K. and Europe, while five were in the United States. Doughty Hanson III even did a deal in Canada.

With institutional investors suffering losses in multiple asset classes, fund-raising has been low. Preliminary figures released by the European Private Equity & Venture Capital Association (EVCA) indicate that European private equity funds raised $21.1 billion in 2002, compared to $41.5 billion in 2001. However, companies looking to be bought out fared better than companies seeking venture capital. Sixty-three percent of funds raised last year went to the buyout sector, while just 32% went into venture capital deals.

The firm has so far made two investments from Doughty Hanson IV, according to Venture Economics (publisher of PE Week): Neartek, a Lakeville, Mass.-based developer of enterprise virtual storage products and services; and Priory Healthcare, a Leatherhead, England-based provider of specialist healthcare services.

In returns diclosed last October by the University of Texas Investment Management Co. (UTIMCO), Doughty Hanson Fund II, the firm’s 1995 fund, had a 50.21% IRR. It was UTIMCO’s best-performing leveraged buyout fund.

Doughty Hanson is headquartered in London and has approximately $5.3 billion under management. Past limited partners in the firm’s funds have included the Connecticut Mutual Life Insurance Company and the Weyerhaeuser Co.