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AlpInvest wins €2bn mezz mandate

The €40 billion private equity investor has more than doubled its mezzanine mandate from its former pension fund parents, expanding its remit to include Europe and opening its London office.

AlpInvest Partners, one of the world’s largest investors in private equity, has received a €2 billion mezzanine mandate from Dutch pension funds ABP and PGGM, its former parents. The mandate is one of the largest mezzanine mandates ever awarded.

It will be invested over three years and is a significant increase over the previous 2004 mezzanine mandate of €700 million, which was invested mainly in the US.

This time the capital will be invested globally with an allocation to Europe of 50 percent expected. AlpInvest plans for 75 percent of this mandate to go into direct investments and the remainder in fund investments.

Volkert Doeksen, managing partner and chief executive of AlpInvest Partners, said: “Obviously we are very excited by this significant new mezzanine mandate and the trust and support of our core sponsors ABP and PGGM. Given the market dynamics of today we consider mezzanine a particularly well placed investment product.”

There has been a renaissance in mezzanine’s attractiveness since cheaper instruments such as second lien debt disappeared from deal structures in the liquidity squeeze of the summer.

The expansion of AlpInvest’s mezzanine activity in Europe is also providing the catalyst for the opening of an office in London, due in the first quarter of 2008. It will ensure close proximity to the players in this market, AlpInvest said. The office will be headed by Erik Bosman, responsible for mezzanine activities in Europe.