HSBC spin-off closes third fund

Montagu Private Equity, the European middle-market private equity firm, has closed its third fund at €2.26bn. This is the firm’s first significant fundraising since it was spun out from HSBC and tops the previous fund by €500m.

HSBC remains a significant shareholder and investor in Montagu III, although Montagu has been able to broaden its core investment base with the new vehicle. HSBC has a 20% stake in the firm and was a 50% cornerstone investor in the €1.75bn predecessor fund, which closed in 2002.

A number of new investors have committed to the fund for the first time and investors in Montagu II will be making further commitments to the new fund.

Montagu’s investor base has been diversified by both geography and investor type, including such categories as pension funds, life companies and endowments. Investors are spread across the US, Europe, the Middle East and the Far East.

The fund placement team of Deloitte were used to provide advisory and placement services outside the US and Guggenheim acted as placement agent in the US. A German feeder fund vehicle was also placed by HSBC Trinkaus.

Montagu’s strategy is to target businesses where it can support incumbent management teams in attractive niche sectors. The firm targets investments in the manufacturing, consumer-facing and service areas, with strong cashflows and good prospects for growth.

Commenting on the new fund, Chris Masterson, chief executive of Montagu Private Equity, said: “With a broad mix of investors from the US, Europe, the Middle East and the Far East, I am particularly pleased with the increased diversity of our investor base.” Masterson reiterated that Montagu would continue its focus on the middle market.