Montagu Private Equity has closed its third private equity fund with commitments of €2.26 billion ($2.73 billion).
Montagu III is the firm’s first independent fundraising since its spin out from HSBC bank in March 2003. Although a cornerstone investor in the new fund, HSBC’s commitment was reduced to around 25 percent of the final total, down from 50 percent of previous funds.
The fund also received a commitment of around €150 million from a private banking syndicate of HSBC clients. Investors in previous Montagu funds include Morley, New York Life and Verizon.
Commenting on the close, Chris Masterson, chief executive of Montagu said in a statement: “With a broad mix of investors from the US, Europe, the Middle East and Far East, I am particularly please with the increased diversity of our investor base.”
A source close to the firm confirmed that North American investors contributed 27 percent of the total fund by number and 25 percent by value. The remainder of the fund by number of investors came from: UK (29 percent), Europe (21 percent), Far East (15 percent) and 8 percent from the Middle East.
Within the US, Guggenheim acted as placement agents for the fund while Deloitte provided placement services outside the US. HSBC Trinkaus placed a feeder fund vehicle within Germany.
Montagu’s previous fund, the €2 billion vintage 2001 Fund II, is approximately 80 percent invested at this stage with a further 10 percent being set aside for follow-on investments and all new investments will be made from the new fund according to the source.
In line with the requirements of its more diverse investor base for this fund, Montagu abandoned its deal-by-deal carry basis and lack of hurdle rate from previous funds, which the source described as more appropriate for a semi-captive organisation. The terms of the new fund were described to be: “very much in line with market standards”.
Montagu is headed up by Masterson and fundraising was led by director Vince O’Brien, who also took over as the new chairman of the British Venture Capital Association (BVCA) in April.
Last month, the firm sold health food company Marlow Foods for £172 million to Premier Foods, representing a 4.5x return on equity invested.