An epic round of fund raising for European development capital is drawing to a close. Here's a rundown of the biggest funds and their investors, as discerned from public records and sources.
3i Europe Investment Partners
The first pool for outside investors raised by London-based 3i Group PLC drew in 330 million ECUs ($408 million), 10% over its initial target. 3i Europe Investment Partners will invest in small- and medium-sized companies in Continental Europe. Some 70 million ECUs already have been allocated for 28 investments in France, Germany, Italy and Spain.
3i committed 100 million ECU of its own money, while the rest came from eight external investors: 42% from three U.S. pension funds, 42% from European institutions and 16% from the Far East. Investors include: the BellSouth Corp. pension fund, Atlanta; the State of Wisconsin Investment Board, Madison; the Government of Singapore; Shell Pensions Trust Ltd., London; Credit Suisse A.G., Zurich; AMP Society, London; and Unilever Superannuation Trustees Ltd., London.
In addition, 3i has raised 150 million for a Large Management Buy-Out Fund investing in U.K. companies. Investors in the fund are AMP and Norwich Union Life Insurance Society, Norwich, England.
APAX Partners & Co. Ltd., London, is raising money for three tranches of a new European early- to late-stage venture capital fund, replacing the 1990 APAX European Ventures, said Ronald Cohen, chairman.
APAX is seeking to raise 150 million ($232 million) for a U.K. tranche and 1 billion French francs ($185 million) for a France-only tranche. Next year, it could seek more than 100 million deutsche marks ($65 million) for a German tranche.
First closings on the U.K. and French pieces are expected before year-end.
Unlike other funds that invest in unlisted companies or engage in buy-outs, Arlington Capital Management will take 10% to 40% stakes in small, quoted companies with capitalizations between 50 million and 250 million ECUs.
Championing the "relationship investing" concept that was once the domain of 19th century merchant banks, the firm hopes to raise more than 150 million ECUs by the end of the year. That figure has been reduced from the original target of 200 million ECUs and delayed some six months because of the pullout of Nomura Securities Co. Ltd., Tokyo, as the Japanese placement agent. Karl Van Horn, chairman of Arlington Capital, said the strategic advice that it can bring smaller companies can help them grow. The fund already has taken stakes in five companies, including Fenner Ltd., a York, England, power systems company with a strong distribution network, and Volcanique, a Paris industrial heating components maker that already has 30% of the French market.
About 80 million ECUs were committed at the fund's first closing. Investors are predominantly American and include the pension funds of the Aluminum Co. of America, Pittsburgh; General Electric Co., Stamford, Conn.; Amoco Corp., Chicago; and the Financial Institutions Retirement Fund, White Plains, N.Y. Other tax-exempt investors include the Howard Hughes Medical Institute, Bethesda, Md., and The Henry Luce Foundation, New York.
Baring Capital Partners
Baring Capital Investors has raised 353 million ECUs ($436 million) for its latest European buy-out fund, Baring Capital Partners, of which 90% came from existing investors.
The fund will buy majority or minority stakes in management buy-outs with values typically between 50 million to 500 million ECUs, largely in the United Kingdom, France, Italy and Germany.
The fund announced its first investment Aug. 26, providing equity financing for the $425 million buy-out of BP Nutrition, a Dutch company which was renamed Nutreco. CINVen, the venture capital arm of CIN Management Ltd., the in-house manager for British Coal pension funds, was the other equity investor.
Investors include the Ontario Teachers Pension Plan Board, North York; the Shell Oil Co. pension fund, Houston; and the Cadbury Schweppes PLC pension fund, Birmingham, England.
Candover 1994 Fund
Candover Investments PLC has raised 213 million ($330 million) at its first closing for its Candover 1994 Fund, including 65 million of its own money.
The buy-out fund replaces the 319 million 1989 Fund, which is mostly invested. The new fund will invest more than 80% of its assets in U.K. buy-outs, with the rest in Continental Europe. Buy-outs typically will exceed 10 million each.
With annualized net returns of over 30% a year since 1980, Candover has pulled in 25 external investors, including 10 new ones. The largest investor, at 30 million, is the Scottish Eastern Investment Trust PLC, Edinburgh; the California Public Employees' Retirement System and the California State Teachers' Retirement System, both in Sacramento, each chipped in about 20 million.
Other U.S. institutional investors include: A.C. Israel Enterprises Inc.; Hancock International Private Equity Partners, Boston; the Illinois Municipal Retirement Fund; the Massachusetts Institute of Technology endowment and retirement plans, Cambridge; the NYNEX pension fund, New York; Prudential Insurance Co. of America, Newark, N.J.; and the Utah State Retirement System, Salt Lake City.
Non-U.S. institutions include: Crossroads UK 1994 Venture Capital Fund, Birmingham, England; The Fuji Bank Ltd., Tokyo; Guardian Assurance PLC, London; Namero Investment Ltd.; Rover Group pension fund; Scotiabank (UK) Ltd., London; Slough Estates PLC, Slough, England; and the TSB Group Pension Trust Ltd., London.
Charterhouse Capital Partners V
Charterhouse, which boasts a 29% a year net return over 13 years, pulled in 234 million ($363 million) at its first closing in July, and has hiked its target to 300 million pounds from 250 million.
Charterhouse Capital Partners V also is geared to invest in buy-outs, with up to 75% in Great Britain and the rest on the Continent. Its previous fund has returned a stellar 42% a year since the end of 1989, even while Europe has been in recession.
The development capital firm -together with its new owners, Credit Commercial de France and Berliner Handels- und Frankfurter Bank - will invest up to 75 million in the fund, though they have the option to add more. The ties with the banks should aid deal flow, said Gordon Bonnyman, managing director.
The only U.S. institutional investors so far are Metropolitan Life Insurance Co., New York, and State Farm Mutual Auto Insurance Co., Bloomington, Ill.
Other institutional investors include: the Abu Dhabi Investment Authority; Charterhouse's own pension fund; Bahrain Middle East Bank; Commercial Union Assurance Co. PLC, London; Crossroads UK 1994 Venture Capital Fund; Dai-Ichi Kangyo Bank Ltd.; Eisen und Stahl Re and Hanover Re; Fuji Bank; Fuji Bank Ltd; The Housing Bank, Bahrain; Industrial Bank of Japan Ltd.; Kuwait Fund for Arab Economic Development; The Long-Term Credit Bank of Japan; NYK International PLC, Tokyo; Rover Group pension fund; and Royal Bank of Scotland Group PLC, Edinburgh.
Morgan Grenfell Equity Partners
Riding on a 36% a year net return since April 1990, Morgan Grenfell Development Capital, London, expects to raise 300 million for its latest buy-out fund, 50% over its initial target.
The firm already had pulled in 261 million ($405 million) at its first closing in June, with 53% coming from U.K. institutions and 18% from U.S. investors. Continental institutional investors, Middle Eastern groups, and Japanese institutions comprise the rest.
The fund invests principally in U.K. buy-outs of more than 20 million pounds in size, and total equity content of 5 million to 8 million, said Colin Brown, director.
Parent company Morgan Grenfell has committed 70 million, while ultimate parent Deutsche Bank has put in for another 30 million.
Other institutional investors include: Anglo & Overseas Trust PLC, London; Bahrain International Bank; Bahrain Middle East Bank; BankAmerica Capital Corp., San Francisco; Bin Hamoodah Co., Bahrain; Commercial Union Life Assurance Co.; English & Scottish Investors PLC, London; Fuji Bank; Greenfriar Investment Co. PLC, London; Gulf Investment Corp., Kuwait; London and Manchester Assurance Co. Ltd., Exeter, England; Harvard University endowment and pension fund, Cambridge, Mass.; Kuwait Investment Office; The Long-Term Credit Bank of Japan; Keystone Inc., Dallas; NYNEX pension fund; Prudential Insurance Co.; Qatar Insurance Co.; Refuge Assurance PLC, Cheshire, England; Scotiabank (U.K.) Ltd.; The Scottish Investment Trust PLC, Edinburgh; Sun Life Assurance Society PLC, Bristol, England.
Despite the loss of Managing Director Jon Moulton just prior to final closing its latest U.K. buy-out fund last spring, Schroder Ventures has met its targets with flying colors.
The Schroder U.K. Buyout Fund III closed with 149 million ($231 million), just 1 million shy of its initial target. Meanwhile, the Schroder Ventures Italian Fund II closed at 108 billion lira ($69 million), 8% over its target.
In addition, the firm's first industry-specific and transnational fund, the International Life Sciences Fund, raised $100 million from 15 investors, with 60% of the assets coming from U.S. investors.
The U.K. Buyout Fund recently made its first investment, in a new company called Paramount Hotels that will purchase quality hotels in England and Wales that have conference facilities.
Institutions investing in the latest round of funds include the pension funds of BellSouth Corp. and General Motors Corp.