Funds: Schroder Ventures’ record raising

Schroder Ventures may have raised its EURO3 billion for its second regional private equity fund for Europe in record time – just three months – but the fund has yet to close. Charles Sherwood, director at Schroder Ventures, explains that this is in part to do with the firm’s intention of widening its future investor base among smaller institutional and private investors.

The information memorandum for this fund raising was sent out in the latter half of January with expectations of a first closing of between EURO1.5 billion to EURO2 billion in mid April. But by this stage EURO3 billion had been received – the figure at which a cap had been agreed with investors. Rather than push the fund significantly higher Schroder Ventures opted to increase the fund size by 10 per cent (EURO3.3 billion).

This additional EURO300 million was then split, with

EURO100 million being reserved for existing investors that were keen to take part in the new fund but looked like being excluded as a result of the high and early response.

The remaining EURO200 million will be used to further Schroder Ventures’ long-term aim of widening its smaller institutional and private investor base. This is being done via a structured product, produced in conjunction with Dresdner Kleinwort Benson, that will be listed on the Luxembourg Stock Exchange to provide investors with a degree of liquidity. Schroder Ventures has taken this move because of its belief that smaller institutional and private investors will become an increasingly important source of venture capital funding over the longer term.

Investors in the main portion (EURO3 billion) part of this fund have committed an average EURO70 million with minimum commitments standing at EURO10 million, whereas the Dresdner Kleinwort Benson product allows a minimum investment of EURO100,000.

The timing of this latest fund raising was important since Schroder Ventures is a long way down the road with three sizeable transactions, one unnamed and the other two, Hogg Robinson and Austria Micro Systems, both in the public to private arena.

Schroder Ventures’ first regional private equity fund for Europe has seven years still to run and, 86 per cent committed, is effectively fully invested. The remainder is earmarked for a number of portfolio companies pursuing buy and build’ strategies.