Phoenix Equity Partners has resulted from the spin out of DLJ European Private Equity from Credit Suisse First Boston. The process has been under negotiation for the last four months.
The announcement that Credit Suisse was to buy Donaldson Lufkin Jenrette (DLJ) was made in October last year. When this transaction went ahead it was the second time Hugh Lenon’s team had been affected by M&A. In 1997 the Phoenix Group was sold to Donaldson Lufkin Jenrette and the private equity fund management business that Phoenix Group had set up in 1991 went as part of that. The team was renamed DLJ European Private Equity.
Around the time of Credit Suisse’s acquisition of DLJ European Private Equity had invested around 15 per cent of its third fund of GBP400 million, which was to be invested in mid market UK buyouts. Lenon notes that instead of forcing the investors in this third fund to stay with the team post its divorce from DLJ, investors were given the option to close the fund early. This was done and immediately Lenon and his team set about transferring those commitments, from the investors who decided to stay with the independent team, into a fund called Phoenix Continuation Fund.
Lenon says 90 per cent of investors chose to stay with the team and the Phoenix Continuation Fund has raised GBP250 million. In addition to this figure Credit Suisse First Boston has committed GBP20 million to the fund.
Phoenix Equity Partners is made up of 12 investment personnel (just three of the total team of 14 stayed with Credit Suisse First Boston) plus five support staff.
In addition to the GBP270 million in new monies to invest, Phoenix Equity Partners has taken all previous Phoenix funds with it as part of the terms of the agreement with Credit Suisse and consequently has circa GBP500 million in total under management. This GBP500 million figure is made up of the GBP50 million Phoenix Development Capital Fund, the GBP133 million Phoenix Equity Partners, and the GBP71 million already invested from the GBP400 million third fund that has been largely returned to investors as outlined.