NEW YORK – Securitas Capital LLC in mid-October held a first and final close on its sophomore effort, the $100 million Securitas Ventures LP fund, said John Shettle Jr., managing director.
The new vehicle will back early-stage risk management companies, insurance-related businesses and insurance industry service businesses, Shettle said.
The current vehicle is an outgrowth of Securitas’ previous fund, the $500 million Securitas Fund LP, which closed in 1995. That vehicle has focused on more traditional, late-stage private equity investments in the insurance industry, he said. However beginning in 1997, the Securitas Fund began to engage in some early-stage investing, he added.
“In 1999, we saw an explosion of plans affecting the insurance industry and in the late spring, early summer of this year we decided the best way to serve this sector of the market was with a vehicle dedicated to early-stage investing,” he noted.
Securitas’ two limited partners from its first fund, Credit Suisse Group and the Swiss Reinsurance Co. (Swiss Re), were both supportive of the idea of a dedicated early-stage investing fund, he added. Both companies decided to return as LPs for the new vehicle, he said.
Shettle expected the fund to make investments in 15 to 20 companies with an average deal size of $4 million to $5 million. The majority of the fund’s total capital will likely go toward backing businesses serving the insurance industry, he added. The vehicle will be invested in North America, Western Europe and Asia, Shettle said.
“We expect a predominant number of the investments to be in Western Europe and North America, but there should be a growing number of deals in Asia, particularly English-speaking Asia like Australia and New Zealand,” he said. Shettle estimated that 80% of the fund will be invested in North America and Western Europe.
To date, the vehicle has completed one investment in SalvageSale.com Inc., a Houston-based business-to-business Internet marketplace for the claims recovery and commercial salvage market. Shettle declined to say how much Securitas Ventures contributed to SalvageSale.com’s $17 million Series B round, beyond saying Securitas led the funding round which included two other investors, Merrill Lynch Ventures and American Re-Insurance Co., a member of the Munich Re Group.
Securitas Capital is an advisor to the fund and as such is not investing any capital in the vehicle, he said. Shettle declined to identify the vehicle’s general partnership group. He said the fund’s management fee and carried interest structure fall at industry standard levels.
The new vehicle should be fully invested in about two years, Shettle said. The firm’s previous vehicle, the Securitas Fund, has done approximately 12 deals for $250 million to date, he added.