ISIS Equity Partners is the latest captive to break free from its parent company, F&C Asset Management. ISIS Equity Partners, led by managing director Wol Kolade, will create a new Limited Liability Partnership ISIS EP LLP to manage its circa £500m of private equity assets. The team will continue to operate out of the existing ISIS Equity Partners offices in London, Birmingham, Manchester and a newly-established Leeds office which will be headed by Andy Lees who joins from Aberdeen Murray Johnstone’s Manchester office. All of the ISIS Equity Partners staff will transfer across to ISIS EP LLP on completion of the transaction which is expected to occur later this month.
The introduction of International Financial Reporting Standards (IFRS) has significant implications for financial institutions which have captive private equity operations because IFRS requires investee companies to consolidate their financial reporting in line with the main shareholder. The group came to the conclusion that retaining ISIS Equity Partners as a subsidiary of F&C Asset Management would not be in the best interests of either party nor the portfolio of investee companies.
ISIS Equity Partners will no longer be consolidated in F&C’s reports and accounts, but will instead become F&C’s ongoing partner for private equity transactions. The transaction will be effected at no consideration and the revenue implications for F&C are insignificant since an ongoing revenue sharing arrangement has been in operation for some time.
Wol Kolade, managing director of ISIS Equity Partners, said: “The relationship between F&C and ISIS Equity Partners is strong and ongoing as our status moves from subsidiary to partner. This is not an earn-out. Institutional clients and VCT Boards have been fully consulted and are supportive of this arrangement, which addresses a challenge also facing other companies in a similar situation.” He stressed that it would be business as usual for the firm which has always operated with a high degree of autonomy with Chinese walls in place between its operation and the F&C fund management team.
The spin-out is the latest in a long list of private equity teams breaking free from larger financial institutions – see table in this month’s news.