Hotbed, the private investor network, is offering individual investors the opportunity to participate in a mainstream private equity fund alongside major institutional investors, by teaming up with Parallel Private Equity (PPE).
Hotbed’s investor members will be able to invest up to £10m in Parallel Private Equity’s 2006 Fund. This is the first time that one of PPE’s funds has been opened up to private investors. Fund raising is due to complete in January, and £65m has already been committed from six institutions. Hotbed members will be able to participate in units of £50,000 through a Hotbed-Parallel Equity Partners UK limited
The collaboration will give private investors access to deals led by leading private equity houses, with which PPE has long-standing co-investment relationships. These houses originate the transactions and undertake the due diligence before presenting them to PPE’s investment committee. Unlike a fund-of-funds, PPE is actively involved in the selection of individual investments.
PPE focuses on management buyouts and growth capital investments ranging from £10m to £250m in the UK and Continental Europe. Investors are likely to be attracted by the firm’s focus on mid-market MBOs, which has historically been a strong performing sector. High profile investments from PPE funds include budget airline Go, which produced a gross internal rate of return (IRR) of 120% in 14 months, and Admiral Insurance, which delivered a 13-fold return on investment in just over five years.
PPE’s net IRR since inception in 1997 has been 12% per annum after all fees and carry. Over the past four years PPE has achieved a net IRR of 18.8%.
Gary Robins, chief executive of Hotbed, says: “It can be almost impossible for non-institutional investors to invest in mainstream private equity funds. We are delighted that our partnership with Parallel Private Equity will give private investors this rare opportunity.”