Parallel Ventures Managers in late October announced that it has appointed Royal Bank Development Capital (RBDC) as its third private equity fund manager. The group has allocated GBP200 million (ecu 284 million) for co-investment in RBDC transactions during the next five years. A spin-out from AXA Sun Life Asset Management (AXA SLAM), Parallel Ventures this February allocated GBP150 million for co-investment alongside Barclays Private Equity, and is also responsible for AXA SLAM’s GBP250 million commitment to 3i’s UK mid-market buyouts programme.
Parallel Ventures is RBDC’s first external client; the five-year-old group, which has deployed GBP350 million to date in the UK, Spain and France, previously invested solely on behalf of its parent, The Royal Bank of Scotland. RBDC managing director Joe McGrane said that, while the Parallel Ventures commitment was doubly welcome as a recognition of RBDC’s success in its chosen sector and as a source of fund management income, the group has no plans at present to take on additional third-party funds.
Paul Whitney, chairman and chief executive of Parallel Ventures, said that the three fund managers appointed to date secured excellent access for the group’s clients to a broad spectrum of UK mid-market transactions, enhanced by exposure to transactions in France, Germany, Italy and Spain: Barclays Private Equity has a presence in France, Germany and Italy, while RBDC is Banco Santander’s partner in the Vista joint venture vehicle in Spain and is a shareholder in French development capital specialist Siparex, with which it also co-invests.
Now that its UK investment programme is complete for the time being, Parallel Ventures is turning its attention to Continental Europe and shortly expects to announce the appointment of local private equity fund managers in Germany, France and Italy.
At the time of its spin-out from AXA SLAM, Parallel Ventures had GBP500 million of group monies under management. This has subsequently been augmented by commitments from two major UK pension schemes, which take Parallel’s capital under management to GBP600 million on a five-year basis. The new investors will not be identified until the beginning of 1999, after legal formalities are completed.
Parallel Ventures hopes to take its investment capacity to GBP1 billion by the middle of 1999 by adding a small number of substantial investors. “Ideally, we want no more than six clients, so that we are able to provide a tailored service”, Paul Whitney explained. The trickiest part of the marketing process, he added, was explaining to potential investors that Parallel Ventures is not a fund-of-funds, but a specialist in selecting quality fund managers with which to co-invest to meet the specific portfolio requirements of individual clients.