Standard Life Closes on $1.37B

Edinburgh-based Standard Life Investments, which manages the assets of British insurance giant Standard Life Assurance Co., announced last week it closed European Strategic Partners II (ESP II) with $1.37 billion.

The fund-of-funds is more than 25% larger than European Strategic Partners, the firm’s last European fund-of-funds, which closed in 1999 with about $1 billion. ESP II has earmarked $1.07 billion for investment into private equity funds and $302 million for direct investments in companies.

The fund brings Standard Life Investments private equity funds under management to more than $3 billion, an increase of 37% in 2003, according to Jonny Maxwell, the chief executive of Standard Life Investments (Private Equity) Ltd.

The fund will focus on European buyout funds with special attention paid to the UK mid-market buyout sector and larger Western European buyout funds. ESP II will commit at most 5% of its assets to venture capital. The company’s main investment focus is on management buyouts and expansion capital with an average total transaction size of between $63 million and $505 million.

Maxwell says that 70% of ESP II was raised from new investors. The fund has Asian, European, North American, Middle Eastern as well as U.K.-based limited partners. North American investors accounted for the remaining 30% of the capital raised in the new fund. State and local pension funds comprise the majority of the fund’s North American capital.

“We focus on mid market buyouts and stuck to our knitting,” says Maxwell, who credits his firm’s consistency with its success.

The fund held a first close in October of 2002. And while it’s taken a long time to raise, any such close is a success in the current fund-raising environment.

“We’ve been marketing longer than we had hoped, but in a market where we’ve seen people sold and fold we’re happy to have done this,” Maxwell adds.

He sees the European buyouts market as staying consistently healthy and expects more exits in 2004 than in years before.

The fund has already committed more than $251 million to private equity, including the Barclays Private Equity European Fund, Charterhouse Capital Partners VII, Graphite Capital VI, the Italian Private Equity Fund IV, and Permira Europe III.

The fund has also committed more than $50 million in direct investments. The fund invested $12.6 million in ONV Topco, a provider of personal hygiene products along with Candover. It also invested $19 million each into Scandinavian construction supplier Danske Traelast and UK retail company Debenhams.