Last week, New York-based private equity and mezzanine provider Veronis Suhler Stevenson (VSS) held a final close of its fourth fund with $1.3 billion (€1.02 billion) of commitments, comfortably exceeding its original target of $1 billion.
Jeffrey Stevenson, co-CEO and managing director of VSS, says that cultivating a European investor base was a prime target for fund IV’s marketing. “It was a substantial increase in terms of the amount of representation by European limited partners,” he says. “We didn’t have a single representative from Europe in our previous fund, but with fund four, European LPs represent about a quarter of the total.”
VSS tasked UK-headquartered Almeida Capital as placement agent for the European fundraising. “We hadn’t used a placement agent before, but we haven’t dedicated a lot of time in the past to fundraising in Europe so it made sense to get some outside help in in terms of introducing us to new relationships and organising the overall effort,” says Stevenson.
It wasn’t simply a case of expanding the firm’s investor base, adds Stevenson, but also of “aligning our investment base with where our investments are,” pointing out that around 20 to 35 percent of VSS’ current investments are in Europe. “A number of those limited partners have important relationships for us that we should be able to build upon.”
Having been established in 1980, VSS stepped up its investment pace in Europe once it had launched its London base. “We’ve been investing in Europe since the 1990s, so it’s not new for us,” says Stevenson. “However, having established our London office in 1999, the percentage of the fund allocated to Europe has increased once we’ve had more feet on the street. But our interest in Europe is and always has been longstanding.”
Stevenson says that Fund IV will largely be opportunistic in where it allocates its capital, but expects around 25 percent of the vehicle to be invested in Europe.
To date, Fund IV has made three significant investments in Europe. Last October, VSS partnered with Mecom Group, an AIM-listed investment vehicle owned by former Mirror Group chief executive David Montgomery, to acquire German newspaper publisher Berliner Verlag, owner of Berliner Zeitung.
The acquisition briefly caused a stir in Europe, and Germany in particular, where a number of celebrities paid for protest adverts, and rival newspapers and some of Berliner Zeitung’s own editorial team criticised “financial jugglers” for meddling with the future of German media.
At the time, Stevenson told PEO that Germany has over 300 independent newspaper publishers, providing fertile ground for the group’s buy and build strategy. By January 2006, VSS and Mecom had acquired a second German newspaper, Hamburger Morgenpost.
Last month, VSS acquired educational publisher Granada Learning from UK broadcaster ITV for an undisclosed sum.
“Our coverage spans the traditional media, including newspapers, magazines, TV and cable to new media, information services and the education sector,” says Stevenson. “So, Berliner Verlag is a good example of traditional media, but expect us to have a broader view in terms of the types of opportunities we pursue.”
With a 30 percent gross IRR across its previous three funds, according to Stevenson, VSS is likely to continue attracting European investors whether it features in the daily newspapers – or owns them.