Standard Life Investments Private Equity (SLIPE), the Edinburgh-based global fund manager, has announced the first closing of its European Strategic Partners 2004 (ESP 2004) private equity fund of funds vehicle on €250 million ($332 million).
ESP 2004 is being raised as a parallel investment vehicle to SLIPE’s ESP II fund of funds, which closed on €1.09 billion in January 2004, and is designed to accommodate investors who wanted to commit to ESP II but were unable to meet the deadline.
“When the time came to close ESP II we had a number of prospective investors that, for internal reasons, were not able to make their commitments at that stage – and we were unable to hold it open any longer,” SLIPE managing director David Currie told PrivateEquityOnline. “But it seemed inappropriate to tell them we were effectively out of the market for the next two years. So we created an additional vehicle to invest in parallel with ESP with the same terms, investment focus and strategy.”
Currie said regular fundraising of this nature is becoming characteristic of the fund of funds market. “Pension funds might be given a shortlist by their consultants of the top five or six vehicles to invest in, but there may only be one or two of them that have products open at that time. Many pension funds find it rather strange that these vehicles will only take money from willing investors once every few years. Therefore, like other fund of funds investors, we are moving to a more annualised, permanently open fundraising model.”
In a statement, SLIPE said ESP 2004 will announce a final closing in September 2005, and has a target amount of €300 million. Asked whether that target still applies, Currie replied: “It may exceed €300 million: we’re just being canny in not setting an outrageously high target.” SLIPE has not disclosed the identity of individual investors at this stage, but said there had been strong support from local authorities in the UK and major corporate pension schemes in the UK and US.
Investors in ESP 2004 have the choice of participating in either a partnership exclusively made up of private equity funds and/or one consisting of at least 70 percent in private equity funds and 30 percent in direct co-investment opportunities. The vehicle will invest in buyout funds focused on Western Europe and which target buyouts generally valued between €50 million to €400 million.
As a result of the first closing of ESP 2004, SLIPE now has private equity assets under management totalling €2.7 billion. European Strategic Partners (ESP), the predecessor to ESP II, closed on €868 million in October 2000.