European LP News, December 2012

SVG Offloads Fund, Keeps Mitts on Iglo

SVG Capital, the London-based fund-of-funds manager, has decided to sell its stake in Permira III, a 2003-vintage, $5.1 billion private equity fund.

The stake in Permira III represents 8% of SVG Capital’s portfolio, which is dominated by investments in other Permira funds. SVG Capital is London-based Permira’s most significant investor.

SVG Capital will realize cash proceeds of £65 million ($104 million) for its stake, which was sold for £90 million ($144 million), a 13% discount on Permira III’s September valuation.

The firm opted for the sale after a review of the risk and return profile of its older assets ahead of a new investment program. However, SVG Capital has retained its 50% interest in Iglo, Permira III’s largest portfolio company.

Float Funds Partners’ Direct Push

Partners Group, the Swiss-listed fund-of-funds manager, has responded to investor requests for it to make more direct investments.

The firm has asked its three founders and largest shareholders to sell about 6% of its stock to raise CHF300 million ($318 million) to support such investments.

“Clients across the globe increasingly want to see a strengthened alignment of interests with the stewards of their assets,” said Partners co-founder Marcel Erni, in a statement.

Currently, Partners has €27 billion ($35 billion) under management, which is split roughly between primary, secondary and direct investments.

More money could be raised for direct investments if the founders acquiesce to a larger free float, though they will not sell more than 4% of Partners’ total share capital each.

Partners Group raised €537 million ($684 million) for its last global fund-of-funds in 2010.

The firm’s core activity is in private equity but it also invests in private infrastructure and private debt.

IFC Supports Russian, Turkish Funds

Moscow-based Elbrus Capital will receive $20 million from IFC for its planned $500 million second mid-market fund, which will seek controlling stakes in Russian companies.

IFC also committed $15 million to Istanbul-based Mediterra Capital’s debut fund, which has a $150 million target and will invest in Turkish small and medium enterprises (SMEs).

IFC, an arm of the World Bank Group, is focusing its global investment strategy on SMEs as a route to job creation and the introduction of new services.

Of more than $20 billion it has invested worldwide this fiscal year, the IFC has committed $1.2 billion to Russia and $480 million to Turkey.

Risk Weighs Heavily on German Investors

German institutional investors, a famously conservative bunch, are now more cautious than at any time in the past five years, according to a survey by Union Investments.

Nonetheless, allocations to alternative investments, such as private equity, have risen in each of the past four years, to 9% of institutional portfolio value in 2012 (but still way off pre-crisis levels).

Of the 106 institutional investors surveyed, 83% marked safety as their main concern when making investment decisions, up from 69% last year and 43% in 2007.

Yet those attitudes weren’t reflected in the respondents’ portfolios, which have shed “safe” investments, such as bonds, and increased their allocations to property, alternatives and money market instruments.

Compiled by Alex Derber