LONDON – Christmas came early for the executive team of NatWest Equity Partners, led by Chief Executive David Shaw, who reached agreement in principle with NatWest Group to acquire the management company for an undisclosed sum. The disposal, expected to be completed in first few weeks of January, constitutes part of NatWest’s defenses against hostile bids from Bank of Scotland and Royal Bank of Scotland.
Meanwhile, NatWest plans to sell its portfolio of private equity holdings, valued at around GBP500 million ($818.6 million), and has appointed Donaldson Lufkin & Jenrette as a placement agent. The private equity assets in question will continue to be managed by the newly independent NWEP management company “for the immediate future,” according to NatWest.
Although sale to an outside group was not ruled out, a management buyout always seemed the likeliest outcome for NWEP, given the complications inherent in disposing a management company with aspirations toward independence to a third party. Similarly, the NatWest private equity portfolio, which reportedly has attracted considerable interest from potential acquirers in the United States, most probably will end up in the hands of a secondary buyer or buyers.
The assets up for sale comprise NWEP’s pre-1996 investments, which are wholly-owned by the parent bank; NatWest’s interest in investments made between 1996 and 1998 alongside other NWEP client funds; and the bank’s GBP200 million ($327.4 million) position in European Private Equity Fund 1, NWEP’s first formal third-party fund, which closed on GBP1 billion ($163.7 billion) last April.
While the NatWest asset portfolio represents a prime opportunity for U.S. secondaries players seeking a diversified exposure to European assets, there also are potential contenders closer to home, including Pantheon Ventures, which is currently raising a $500 million global secondaries fund, and Coller Capital, due to hold a final close on its $400 million-plus offering in the near future.