Legal & General Closes Sixth Annual LBO Fund –

Legal & General Ventures (LGV), which in 1994 launched an innovative 12-month fund structure, this month announced the closing of its 1999 annual limited partnership, which will target U.K. and continental buyouts and buy-ins during this calendar year.

External investors committed GBP94.5 million ($156.2 million) to the LGV 1999 Private Equity Fund LP, the greatest level of third-party capital LGV has raised to date.

However, because Legal & General Group-the private equity group’s parent-reduced its commitment to GBP93.5 million, compared with the GBP100 million it has contributed to the previous annual funds, the 1999 vehicle stands at a total of GBP188 million, slightly below the 1998 fund’s record GBP190.5 million total.

LGV Marketing Director Roger Charlesworth said the distribution of this year’s fund is in line with LGV’s original objective of matching Legal & General’s own commitment with externally generated capital.

The LGV annual funds have attracted high levels of repeat customers, and the 1999 vehicle appears to be no exception. The external L.P. group is 22-strong-the same size as last year-and includes new participants from both Europe and the U.S., as well as a number of returning investors. U.S. investors contributed 50% of the fund’s external capital, Mr. Charlesworth said, with the balance coming primarily from European sources.

Terms of the LGV annual funds remain unchanged since their inception, with a 0.5% fee on commitments and 1% on drawn-down capital.

Competitive Pricing Slows Deal Flow

The LGV 1998 fund invested in five buyouts and buy-ins with a total value of GBP1.2 billion. Its major deals were Target Express and Bluecrest Seafoods in the U.K. and Emtech in Germany. The vehicle also backed a smaller transaction, Sitex, and acted as a co-investor in one of 1998’s major continental European transactions.

Although the 1998 fund made two fewer investments than its predecessor, Mr. Charlesworth maintained the decreased activity was a result of the strong line LGV maintained on pricing.

LGV aims to match fund-raising levels this year for its millennium partnership, Mr. Charlesworth confirmed. “We believe that somewhere around GBP200 million is the optimum level of manageable cash for an annual fund,” he said.