European LP Briefs, September 2012

High Court Limits LP Access to Fund Documentation

Private equity investors often clamour for greater transparency from their fund managers, but a recent United Kingdom High Court judgement offers minimal support for their cause.

The judge had to decide what information a limited partner was entitled to about his private equity fund and its underlying investments, both under statute and under a partnership agreement.

Essentially, the court ruled that sound extensive reporting by a general partner will discharge statutory obligations, and that any further disclosure should be provided for in a contract between GP and LP.

For instance, if special purpose vehicles (SPVs) are created to perform fund purchases, LPs only have limited statutory access to documentation pertaining to those SPVs.

The judge also disagreed with the claimant that all credit agreements, mezzanine facilities and correspondence with bank lenders must be disclosed to LPs under British law, except where LPs were jointly liable for a credit facility.

EIF Peps up Lithuanian Startup Scene

The European Investment Fund’s status as chief benefactor to Europe’s venture market has been further bolstered by new investments in two Lithuanian funds.

Vilnius-based Practica Capital will receive cornerstone financings of €11 million ($14 million) and €6 million ($7 million) from the EIF for venture and seed funds respectively.

Practica hopes to take the venture fund up to €16 million ($20 million) and invest from €200,000 to €3 million ($250,000 to $3.7 million) per deal in Lithuanian businesses.

The seed fund, meanwhile, will invest from €3,000 to €200,000 ($3,700 to $250,000) and will operate in tandem with Practica’s startup incubator program, which provides office space and legal and business advice to new or prospective companies.

Businesses that merit support from the seed fund could receive follow-on investment from Practica’s venture vehicle, though that will also make standalone investments in going concerns.

Evonik becomes Pangaea’s latest corporate LP

German chemicals company Evonik has bonded with a Canadian cleantech fund as part of its strategy to invest €100 million ($124 million) into startups and specialized venture funds.

Pangaea Ventures III had already attracted significant corporate industrial backing when it hit a $50 million first close in May, including investment from Asahi Glass and Mitsubishi Chemical.

The fund will focus on the advanced materials, speciality chemicals and nanotech sectors, particularly where they relate to energy generation and storage, and is aiming for a final close at $100 million.

The size of Evonik’s investment was not disclosed.

Compiled by Alex Derber