Barclays spin-out Equistone closes first independent fund on €1.5bn

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london-city-st-pauls_sqEquistone Partners Europe has closed its latest fund with commitments of €1.5bn, marking the mid-market firm’s first vehicle since spinning out of British banking giant Barclays just over a year ago.

Equistone Partners Europe Fund IV (EPEF IV) attracted commitments from pension funds, funds of funds, sovereign wealth funds, and insurance companies, 70 per cent of which were existing investors in the London-based firm’s previous funds.

The team began fundraising in March 2011 and secured commitments from 42 investors in Europe (53 per cent), North America (16 per cent) and the rest of the world (31 per cent).

The strategy for EPEIV will follow on from the firm’s previous three funds, which invested in buyouts valued at between €50m and €300m, and closed with commitments of €1.25bn, €1.65bn and €2.45bn in 2002, 2005 and 2007 respectively.

“This achievement reflects an impressive track record and real strength and depth across the entire team, which underpins the franchise that we have developed in the UK, France and Germany,” Equistone managing director Rob Myers said. “This has been evidenced by the seven new investments made during 2012 and a number of highly successful realisations.”

Investments already completed from EPEF IV include dosage manufacturer Unither Pharmaceuticals, luxury holiday specialist Audley Travel, and EuroAvionics, a manufacturer of civil certified avionics systems for helicopters and airplanes.

Exits completed from previous funds in 2012 included the €1bn sale of tax-free shopping specialist Global Blue to Silver Lake and Partners Group, Kermel, a maker of meta-aramid fibre for protective clothing to Qualium, and Ratioform, a supplier of packaging solutions to TAKKT AG for €210m.

Sources told AltAssets last year that the firm is also in the process of selling Hydrasun, a Scottish company that makes industrial hoses and other parts for the oil and gas industry, in a deal that is expected to fetch more than £100m.

Lazard placed EPEF IV, while Clifford Chance acted as fund formation counsel.

Fundraising is widely regarded as the biggest issue facing firms during a spin out as captive firms depend heavily on parent companies for commitments.

One source told AltAssets that Barclays did not allocate to EPEIV, despite contributing between €600m and €650m to previous funds.

Barclays Private Equity European Fund I is still active, and was generating a net multiple of 2.2 times and a 29 per cent net IRR as of March 16 2012, according to investor documents seen by AltAssets.

Fund II was generating a 1.4 times multiple and a 15 per cent IRR, while Fund III was generating an IRR of nine per cent and a multiple of 1.3 times.

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