LONDON – Royal Bank Ventures, a technology venture capital fund, is the latest addition to The Royal Bank of Scotland’s private equity offerings.
Royal Bank Ventures will invest between GBP1 million ($1.5 million) and GBP10 million ($14.5 million) in first round funding, excluding seed-stage investments, right through to pre-IPO financing within the technology, media and telecom sectors. Deal sourcing will involve the bank’s network, including a number of links either established or being established with U.K. universities.
Managing Director Bill Troup says he expects the team, which currently stands at three, to lead transactions in the U.K. and initially co-invest in Continental European deals. The plan is to invest around GBP150 million ($218 million) over the next three years, all of which will be booked against the bank’s balance sheet, leaving Troup to concentrate on investments rather than fund raising – with the latter becoming an increasingly unappealing prospect this year.
The fund has one deal – Stortext – under its belt already. The GBP5 million ($7.5 million) financing was led by Royal Bank Ventures alongside BancBoston, Scottish Equity Partners and LICA in October. Stortext is a digital documentation service provider on an application service provider model.
Troup is joined by Fiona-Jane MacGregor and Doug Fleming. MacGregor was previously with The Royal Bank of Scotland’s strategic investments group, while Fleming was part of the bank’s leveraged finance team. Troup says he will recruit between eight and nine executives, probably by the end of this year, if not before. A third of the team is likely to reside in Edinburgh, Scotland and two-thirds in London.
Troup was previously part of the bank’s leveraged finance team, which is led by Leith Robertson. Troup has been with The Royal Bank of Scotland’s leveraged finance group since 1994 after leaving Morgan Crucible. There he was part of the M&A team and spent his time working on corporate acquisitions and disposals for the group worldwide.
Troup had taken the reins at Caledonian Capital, the joint venture that The Royal Bank of Scotland had set up with Bank of Scotland to allow the two to combine balance sheet strength and compete at the larger end of the leveraged buyout market. Following The Royal Bank of Scotland’s fight with Bank of Scotland to buy NatWest Bank last year, the rationale for Caledonian Capital, from The Royal Bank of Scotland’s point of view, had disappeared. NatWest Acquisition Finance had long established a considerable presence in the debt market, in fact some way ahead of The Royal Bank of Scotland. In the U.K. market NatWest Acquisition Finance ranked 7th with 27 deals in the major U.K. buyouts category worth a combined GBP687 million ($1 billion) and The Royal Bank of Scotland ranked 11th with GBP260 million ($390 million), according to data from Thomson Financial Securities Data.
As soon as the merger of The Royal Bank of Scotland and NatWest Bank was complete, Caledonian Capital began to wind down operations only completing work in progress. Since that time, Troup has been working to make the Royal Bank Ventures concept a reality.
Royal Bank Ventures is part of The Royal Bank of Scotland’s private equity group. The other operations in the group include Royal Bank Private Equity, NatWest Development Capital and Asset Management Services.