European LP News, May 2011

Alliance Breaks off PE Trial

Scottish investment company Alliance Trust has shut down Alliance Trust Equity Partners (ATEP), its private equity investment arm.

The Alliance board said it would conduct an orderly disposal of ATEP assets to focus on the company’s core investment portfolio of listed equities.

The decision may have surprised some investors, since Alliance raised its private equity allocation from 3.2% of total assets in January 2010 to 3.8% by the end of February 2011.

However, as Alliance’s total assets—which were overwhelmingly held in equities—fell in that time, the total committed to private equity fund also decreased, from £227 million to £110 million ($370 million to $180 million).

In early 2010, ATEP was a limited partner in 10 funds, including ones managed by Standard Life, Silverfleet Capital Partners and Impax Asset Management.

ATEP was formed in 2006 after Alliance bought Albany Venture Managers, taking on some of its managers in the process.

Verdane Capital Purchases Eqvitec Funds

Oslo-based Verdane Capital has taken over management of the €140 million ($197 million) Eqvitec Technology Fund III from Finnish private equity firm Eqvitec.

Verdane also renamed the fund Verdane ETF III.

Verdane Capital has acquired an interest in the fund, although most of the fund’s investors chose to retain their interests under the new management.

The IT and industrials-focused fund’s portfolio was completed in early 2010 with an SEK26 million ($4 million) investment in online Swedish film service Voddler, and comprised 12 companies when Verdane took over.

It marked Verdane’s third secondaries deal in Finland since summer 2010, following its acquisition of Eqivtec’s ETF II and the privately owned Cumasa portfolio.

For Eqvitec, the transaction marked its third fund divestment in a year. Eqivtec’s divestments began in Spring 2010 when some of the firm’s managers spun out its mezzanine investment activities, worth more than €150 million, to form Armada Mezzanine Capital.

Investor Shift in Post-Crisis Astorg Fund

Strong interest from pension funds and Asian investors has helped Astorg Partners close its fifth fund 30% above its original target.

Dedicated to mid-market European buyouts, Astorg V closed at a hard cap of €1.05 billion ($1.5 billion) after six months of fundraising.

Of the fund’s 44 investors, 25 were new to Astorg, and about one-third were pension funds. In contrast, pension funds comprised only 19% of LPs in Astorg IV, which closed at $800 million in 2008.

A pronounced fall in fund-of-fund and insurance company involvement in the new fund marked a further shift away from Astorg IV’s LP composition.

Astorg also attracted sovereign wealth fund capital absent from Astorg IV and, in a first for the Paris-based firm, investment from Asia.

Asian investors represent 18% of the Astorg V investment base, while European and North American funding represents 55% and 27% respectively.

The portfolio of the 2008-vintage Astor IV, which is still being invested, numbers six companies in sectors ranging from precious-metalworking to insurance, to funerals.