Kennet Venture Partners is the most recent VC firm to break free from its parent, following the likes of HSBC Private Equity, now Montagu Private Equity, and DB Capital Partners. Kennet’s three managing directors, Michael Elias, David Carratt and Javier Rojas, have led a management buyout of the business from global M&A adviser Broadview Holdings. The value of the transaction is undisclosed. The three directors each have an equal holding in the business.
Michael Elias said: “There is a natural evolution of investment firms towards independence. We believe that becoming independent is a logical step in the development of the firm.”
Broadview has been involved with Kennet since its inception in 1997 when the business was set up as a joint venture between Broadview and Electra Partners. Its first fund was a £48 million fund, which is now fully invested. Broadview acquired Electra’s stake in 2000, just before fund raising for the firm’s second $250 million fund had begun, to which Broadview originally committed $50 million.
Broadview’s change in strategy began in late 2001 and in January 2002 the group decided to reduce its own commitment to Kennet II from $50 million to $15 million. Following the buyout Broadview will no longer have any interest in Kennet II. The group will now focus on its core business of investment banking. Kennet and Broadview will continue to co-locate their offices in London and Silicon Valley, and Kennet’s access to relevant Broadview deal flow will continue unchanged after the buyout.
Other investors in Kennet’s two funds have been consulted about the buyout and support it. Kennet’s largest investors include Harbourvest, Bank of America, Swiss Re, Swiss Life and Allianz.
Kennet invests in the technology space and has made 23 investments in total. The first fund is fully invested and Kennet II still has 80 per cent of funds available for investment. With significant funds still available for investment, Elias does not envisage the team going out to fund raise for another two to three years.
As far as opportunities are concerned he says: “We’re more enthusiastic about [deals] we’re seeing today than 12 months ago. Pricing seems really to have hit the bottom. The key challenge is which technology markets are going to be the ones that recover.”