NeSBIC, the Dutch private equity firm, has made a proposal to reduce the size of its Converging Technologies & e-Commerce Fund (NeSBIC CTe Fund), which it launched during the Internet boom of 2000. The fund will not be making any new investments and will instead concentrate on nurturing its portfolio of 16 companies. The fund originally closed on EURO260 million, over EURO100 million ahead of target and now plans to scale back to EURO142.4 million, says managing general partner Robert Wilhelm. This is closer to its original target of EURO150 million. Investors in the fund, including insurer Fortis, which provided a EURO50 million commitment, are expected to approve the fund reduction in the coming weeks.
Wilhelm said: “We have decided to do this as we feel it is the right thing to do for our investors. The opportunities are not as great as we expected them to be at the time of the fund’s launch. We have sufficient funds to continue to support the portfolio, but we won’t be making any new investments.” The fund had a stronger focus on e-commerce than NeSBIC’s previous funds, but also focused on communications services and enabling IT technologies. One of the companies facing difficulties in CTe Fund’s portfolio was Swedish online retailer LetsBuyIt.com, which managed to bounce back from the brink of bankruptcy earlier this year with a EURO4 million round of funding. Not so lucky was Twest, a provider of interactive web applications forced to close down due to insolvency.
NeSBIC follows a handful of technology funds, both Stateside and in Europe that have recently slashed funds or reduced management fees following lack of investment opportunity and under-performing portfolios. In the US, Mohr, Davidow Ventures cut its fund by 20 per cent and was followed by Kleiner Perkins Caufield & Byers’ fund with a 20 per cent reduction in size. In Europe Benchmark Capital trimmed its fund from $750 million to $500 million; Atlas Venture in June cut Atlas Venture VI by 12 per cent, reducing its size from $967 million to $850 million and Viventures Partners has also cut its second fund by 20 per cent.