Parallel Ventures, the co-investment mid market private equity firm, is close to finalising an-investment agreement with a Spanish mid market private equity house. This will be the fourth and, for the time being, final agreement since Paul Witney, chairman and chief executive of Parallel Ventures, began looking for such partnerships last year.
The first such partnership signed was with Acland in France, which was closely followed by an agreement with Equivest in Germany and Emerald in Italy as last year drew to a close. Emerald is advised by PM & Partners, a new venture recently started by Francesco Panfilo and Andrea Mugani, both of whom were previously with ABN AMRO Capital Investments.
Until last year Parallel Ventures relied on co-investment agreements with 3i, Barclays Private Equity (BPE) and Royal Bank Private Equity (RBPE). The 3i agreement relates to UK investments only. The agreement with BPE gave Parallel exposure to France, Germany and Italy, as well as the UK. And, in addition to the UK, RBPE offered opportunities in France and Spain.
These agreements, notes Witney, are long term and extend beyond the life of any single fund. This, and the increase in co-investment partners, is necessary because of the unique structure operated by Parallel, which sees the firm with six limited partners that put Parallel in the position of having the capacity to invest around GBP250 million per annum. Parallel’s limited partners must commit a minimum of GBP10 million per annum for a minimum of five years. Witney says he would be interested in raising the firm’s number of limited partners to eight, but doesn’t envisage there currently being capacity for much more than that.
Parallel Ventures targets the mid sized management buyout market as a consequence of the size of funds that it has to invest and Witney’s pre-Parallel private equity experience that saw him with leading roles at Cinven and NatWest Equity Partners.
Parallel was set up in 1997 by Witney following difficulties in placing GBP500 million into the private equity mid market in the UK on behalf of his then employer Sun Life. Having got Parallel off the ground in April of the following year Witney undertook a management buyout whereby 25 per cent of the management company is retained by Axa, Sun Life’s parent company, and the remainder is held by Witney. Around a year ago Parallel bought
the UK fund-of-funds manager Westport Private Equity in order to be able to offer a fund-of-funds solution to its limited partners. Parallel Ventures charges its investors conventional venture capital fund fees.