NEW YORK – INVESCO Partnership Fund II in February was slated for a first close on an undisclosed sum, and INVESCO planned to shift its fund-raising attention from the United States to Europe, said Parag Saxena, INVESCO Private Capital’s head.
Launched late last year with a $500 million target, the fund-of-funds will make venture capital and other private equity investments in the U.S. and abroad (VCJ, December 1998, page 17). Investors may decide how much of their capital goes toward several types of investments.
L.P.s Pick and Choose
Limited partners can either choose the investment mix recommended by INVESCO – 30% venture capital, 30% non-U.S. and 40% other U.S. investments – or they can leave the decision making to the fund’s management team or invest opportunistically to balance their portfolios, Mr. Saxena said. In some cases, large institutions have requested that INVESCO invest in smaller vehicles that could prove cumbersome for the large institutions to back directly.
Mr. Saxena declined to name limited partners but said fund raising had been progressing “better than expected.” Backers include endowments, pensions and financial institutions, he said.
INVESCO, a global investment manager, bought Chancellor LGT Capital Management about a year ago and changed the group’s name to INVESCO Private Capital. The buyout did not affect the investment decisions of L.P.s, said Mr. Saxena, noting that many of them already have existing investing relationships with other branches of INVESCO.
The firm’s head of private capital would not disclose the exact management fee or carried interest split for the fund-of-funds, but said INVESCO would take carried interest only on the secondary positions it buys, and the management fee is less than 100 basis points.
The firm’s last fund, INVESCO Private Capital III, formerly known as Chancellor Private Capital III, is a regular direct-deal fund and not a fund-of-funds. The vehicle closed on $330 million in 1997 and has drawn down some 40% of its capital, Mr. Saxena said. INVESCO Partnership Fund I, a fund-of-funds resembling the new fund-of-funds, closed on $380 million in 1997.