Star Capital launches “innovative” fund

Star Capital Partners aims to raise E500m for the closing of its first 'capital-outsourcing' fund.

Star Capital Partners, a new European private equity firm specialising in the acquisition and development of capital-intensive businesses, is aiming to close its first fund, STAR 1, at E500m by the end of the year. The Royal Bank of Scotland Group and Banco Santander Central Hispano are core sponsors and major investors in the fund.

The fund is aiming to achieve attractive returns through investment in capital assets and capital-intensive businesses that have strong cash flows in transportation, energy, oil & gas, industrial installations and telecommunications.

The firm claims that the number of acquisition opportunities within these sectors is growing rapidly as European corporations “seek to liberate capital tied up in their asset base and refocus it on what quoted equity markets regard as value-enhancing activities”. Typical target assets vary from telecommunications and power infrastructure to industrial plants throughout Western Europe.

STAR 1, which had its first closing at E272m earlier this year, also announced the acquisition of TotalFinaElf Connect (Connect) and TotalFinaElf Pipelines (TPL) from TotalFinaElf Midstream UK for around £100m (E158m). Connect and TPL install, maintain and own pipelines connecting UK domestic households to the gas supply.

Connect and TPL, which trade as separate entities for regulatory reasons, have a market share of approximately 35 per cent. They currently serve over 135,000 households and have contracts for a further 110,000 still to be connected. At the end of 2000, the company, which is based in Cardiff and employs 103 people, had total assets of about £60m. Under the ownership of Star Capital, TPL and Connect, have become part of a new group named Inexus.

Star Capital believes its fund is a “truly innovative” development in alternative assets. Managing director Stephen Wright said that to his knowledge, there is no fund out there targeting these types of opportunities. “To make a lot of these deals work you need risk taking equity and a more long term view than the other alternative providers can offer,” he explained.