European Fund News, January 2011

Ireland Kicks Off New Entrepreneurial Fund

The Irish government and the Bank of Ireland kicked off a new fund to support entrepreneurial startups.

The €17 million ($22 million) startup and emerging sectors equity fund received €15 million ($19.8 million) from Bank of Ireland and €2 million ($2.6 million) from Enterprise Ireland. It is the organizations’ second fund for emerging startups.

Young businesses with the potential to stimulate exports and deliver jobs growth will be eligible for investments of €100,000 to €500,000 ($132,000 to $659,000). The fund will be managed by Dublin-based venture firm Delta Partners.

EQT Moves Into Debt Finance

Swedish buyout giant EQT added more capital to its arsenal with the close of a €350 million ($461 million) credit fund.

The EQT Credit Fund will make mid- to long-term investments in the debt of operationally sound but over leveraged mid-sized European companies. It also may operate in the secondary market.

The fund took more than 18 months to raise in what Paul de Rome, co-head of the EQT Partners credit team, called an “extremely challenging market environment.”

Advent Closes First Life Sciences Fund

Advent Venture Partners closed its first life sciences focused fund, raising £75 million ($116 million).

“In an environment of unprecedented difficulty for raising European venture funds this represents a very satisfactory result,” said Shahzad Malik, general partner.

Advent Life Sciences will invest in early and mid-stage life sciences companies in Europe and the United States. It includes a £15 million ($23 million) commitment from the UK Future Technology Fund.

Maven Launches Second VCT Top Up

Maven Capital Partners launched a linked top-up offer for four of its income and growth venture capital trusts to secure funds for additional later-stage investments.

The offer aims to raise £6.4 million ($9.9 million) with an anticipated close on April 29.

Along with the usual VCT tax breaks, Glasgow-based Maven will offer investors up to eight distributions per year and eligibility for any final dividends payable between May and July 2011. It is Maven’s second linked top-up of the year.

Rockley Doubles Down On China

Technology investor Rockley Group has teamed up with the government of Shanxi province in China to raise a $100 million fund.

The move will expand Rockley’s China Fund to $200 million.

The latest initiative, dubbed the Shanxi Zhongying Rockley fund, is a joint venture with the Shanxi Small and Medium Enterprise Investment Corporation contributing $60 million and London-based Rockley the remainder. It will support businesses in the Shanxi region, which supplies one quarter of China’s coal.

Big Spenders Bankroll UK’s Venture Trusts

More than half of the £230 million ($357 million) venture capital trusts in the United Kingdom raised in 2007 and 2008 came from just 10% of all investors, according to HM Revenue and Customs.

A similar proportion of wealthy investors accounted for half of the record £780 million ($1.2 billion) VCTs raised in 2005 and 2006.

British law allows individuals to invest up to £200,000 ($310,000) per year in VCTs and claim 30% income tax relief. From 2004 to 2008, just 4% of investors committed the maximum £200,000. Speculation has arisen that the government could increase VCT tax breaks.

Compiled by Alex Derber