Private Equity – Former NatWest portfolio sold

The Royal Bank of Scotland has resolved one more issue in the fall-out of its hostile acquisition of UK-based NatWest Bank last year. NatWest Bank’s private equity arm, NatWest Equity Partners (NWEP), eventually went the long expected solo route, reaching agreement with its parent late last year and, as recently as May, renaming itself Bridgepoint Capital. While The Royal Bank of Scotland left the portfolios built in the NWEP days with Bridgepoint Capital to continue managing them, it was clear the bank was seeking a buyer.

The NWEP portfolios contained unfunded commitments worth approximately $200 million, with those funded resting at around $800 million. This brings the total transaction figure to around the $1 billion mark (XX million), which buyers are noting as the largest secondary private equity purchase in the market to date.

The buyers come in the form of three secondary investors who are leaving the fund management of the portfolio in the hands of Bridgepoint Capital. The three secondary investors are: UK-based Coller Capital, which has invested 57 per cent by transaction value in a total of 292 companies; Hamilton Lane Advisors, which has invested nine per cent by transaction value across 141 investee companies; and New York-based Lexington Partners, which has invested 34 per cent by transaction value in 151 investee companies.

NWEP’s typical investment averaged GBP15 million with a minimum investment level of GBP2 million. This has continued under Bridgepoint Capital, which has presences outside the UK in Germany, France, Italy and France as well as a number of UK-based offices outside London. How long these UK offices outside London will remain viable outside the larger sponsoring parent structure of NatWest days remains to be seen.

The Royal Bank of Scotland intends to take its private equity business forward through its Royal Bank Development Capital unit which currently has around GBP500 million in funds under management, compared with Bridgepoint Capital’s GBP2 billion.