F&C aim for €200m

F&C Investments has held a first closing on its latest private equity fund of funds, one aimed the European mid-market which expects to close before the end of the year.

So far F&C European Capital Partners has accumulated €112m, and is looking for a final total of €200m. Investors have mainly come from the UK and the Netherlands, but the asset management firm expects to broaden their investor bases as it seeks final close.

This latest offering from F&C follows in the footsteps of the F&C Private Equity Trust, a £140m listed fund of private equity funds. Both are managed from the Edinburgh office by the former Martin Currie team, headed by Hamish Mair.

Mair said of the new fund: “The European mid market, which is defined as private companies with enterprise values of between €50 and €500m, is a very broad and inefficient tier of an expanding asset class. There are literally thousands of companies in this size bracket across Europe that could benefit from private equity finance. Through F&C European Capital Partners LP we will access a wide range of opportunities via a number of locally based experts and others who operate on a Pan European basis. We will also be backing several emerging manager groups. We have found that the alignment of interest between private equity managers and investors is especially strong with emerging groups.”

The F&C private equity team will be looking to invest in at least 20 funds, from buyouts to mezzanine, and will allocate 30% for direct investments, mainly in deals led by private equity firms known to F&C.

Mair said: “We have seen a strong pipeline of good quality funds and co-investment opportunities. We expect the fund to be fully committed well within the three year investment period. It is noticeable that the pricing of private equity deals in the mid market continues to offer good prospects of excellent long term returns.”

Incorporated into the new fund is a feeder vehicle which will invest in listed private equity funds, providing investors with immediate exposure to the private equity market. As the underlying fund and co-investment portfolio builds up, the listed portfolio will be gradually sold down. The fund is also able enhance returns through the selective use of borrowings with the ability to gear up to 30% of total portfolio value.