F&C Asset Management has today announced a strategic entry into the private equity fund of funds segment with the acquisition of Martin Currie Investment Management’s private equity funds business unit.
The transaction, which is part of F&C’s strategy of developing higher margin product areas, will see a team of three private equity fund of funds managers, headed up by Hamish Mair, re-locate to F&C’s Edinburgh office. The team will be tasked with developing a significant private equity fund of funds business for F&C’s pan-European client base.
Separately the Board of the Martin Currie Capital Return Trust PLC, currently managed by Mair’s team, has announced today that it will transfer the investment mandate to F&C on 20 June. The Board of the Discovery Trust PLC, managed by F&C, has also issued proposals, which have the support of major shareholders, for a voluntary liquidation and transfer of assets to the Martin Currie Capital Return Trust.
Discovery’s proposals are expected to become effective in August, when the enlarged trust will be re-named F&C Private Equity Trust PLC. It will become F&C’s flagship private equity fund of funds vehicle with assets of more than £90 million. Friends Provident PLC is to become a cornerstone investor in the trust, with a £20 million commitment to new shares.
“We are seeing significant demand from both institutional and retail clients for ‘alternative assets’ and private equity in particular,” explained Nick Criticos, Head of UK Retail and Investment Trusts at F&C. “With around 7.5% of US institutional portfolios invested in private equity but just 3.6% in the UK (see note 2) we believe this is an area set for further expansion as investors seek to diversify and also participate in the strong returns delivered by this asset class.”
“Through our relationship with ISIS Equity Partners we already have an excellent partner for direct investment in UK private equity opportunities via Limited Partnerships and Venture Capital Trusts,” said Criticos. “This will be complemented by our move into the private equity fund of funds space which will enable access to global private equity opportunities and a wide pool of private equity talent.”
F&C Private Equity Trust, which will be one of just a handful of listed private equity fund of funds, will initially be spread across around 30 private equity funds and over 200 underlying investments in Europe, NorthAmerica and the UK. No other private equity fund of funds investment trusthas a comparable balance between UK, European and US assets.