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UK & Ireland: June 2001

Greenhouse granted independence from Reuters, Mercury renamed HgCapital, Chancellor outlines pro-venture policies, 3i takes technology hit...

Gensec launches its first Irish venture fund
South African bank Gensec announced it was to establish its first venture fund in Ireland to focus on European information technology. The bank, which already has an Irish operation, will market the fund to South African and European institutions and aims to raise up to E50m. Gensec Ireland has already guaranteed E5m. South African investors are being offered a E20m share and the balance will be offered around Europe. The fund will concentrate on investing in high-growth companies in software and communications markets, particularly internet infrastructure and e-business applications. (14.6.01)

Chancellor announces pro-venture measures
Just days after Labour was elected into power, Chancellor of the Exchequer Gordon Brown outlined a strongly pro-venture policy agenda for the government's next four years. In his proposals, Enterprise for All - the Challenge for the Next Parliament, he promised progress in a number of key areas that have long been at the top of the list for VC lobbyists. He pledged to cut capital gains tax on business assets from April 2002, announced an extension to the Enterprise Management Incentives scheme and promised a white paper on reforming insolvency laws. (18.6.01)

Charterhouse breaks free from HSBC…
Charterhouse Development Capital joined a growing list of firms that have spun out from parent companies by completing its management buy-out from HSBC. The firm was acquired by HSBC last year when it bought Credit Commercial de France. The bank already had a well-established private equity business, HSBC Private Equity, and so the move by CDC for independence was not unexpected. Schroder Ventures, UBS Capital, Mercury Private Equity and F&C Ventures have all recently made similar breaks. (13.6.01)

…and Greenhouse to leave Reuters
Reuters confirmed reports that its corporate venturing arm, the Greenhouse Fund, is to spin out in an MBO. The new firm, RVC (derived from Reuters Venture Capital), will be headed by current Greenhouse chief executives John Taysom and David Lockwood. They will be joined by 17 colleagues who will leave Reuters. Sir David Walker, senior adviser to Morgan Stanley International, will be RVC's non-executive chairman. In May, Reuters announced that its second fund, Greenhouse II, was to spin off and seek outside investors. (14.6.01)

BVCA names Truell as chief executive
The British Venture Capital Association appointed Edmund Truell, chief executive of Duke Street Capital, as its new chairman for the coming year. Truell took over from David Thorp, managing director of Friends Ivory & Sime Private equity. He is chairman until June 2002. Michael Queen, 3i's finance director, was appointed vice chairman of the BVCA and chairman of its Investor Relations Committee. (12.6.01)

Mercury becomes HgCapital, makes new appointment
Six months after buying itself out from Merrill Lynch, Mercury Private Equity has rebranded itself HgCapital. Its new identity is based on the chemical symbol for mercury and is also an acronym for high growth. The firm also announced that it has appointed Leonard Licht as its new chairman. Licht was deputy chairman at Jupiter Tyndall and before that, vice chairman of Mercury Asset Management Group. (21.6.01)

Duke Street prices Europe's largest CDO
Duke Street Capital Debt Management, a new enterprise sponsored by the Duke Street Capital Group, completed the pricing of Europe's biggest ever collateralised debt obligation fund (CDO) and was on course to close it by the end of the month. The E750m Duchess I is the latest in a growing list of CDO funds in Europe, marking an increasing sophistication in the region's buy-out market. Duchess focuses on senior and mezzanine loans and has a smaller composition of high-yield bonds than some of the recent European funds. The fund will be made up of about 65 per cent senior debt, 15 per cent mezzanine and up to 20 per cent of high-yield bonds. CDOs make up as much of 50 per cent of the buy-out market in the US but just four to five per cent of Europe's market. The eight or so funds that have been launched in Europe - all in the last two years - represent a gradual catch-up with the other side of the Atlantic and are expected to grow rapidly in the years ahead. (12.6.01)

EC approves English regional venture capital
After nine months of deliberation, the European Commission gave the green light to UK government plans to create £250m of regional venture capital. The go-ahead means that the government can use £50m of state aid to attract £200m of private capital to invest in start-ups in English regions that are otherwise unable to attract venture capital funding. Last October, the EU's competition commissioner, put the brakes on the scheme, claiming that it breached EU regulations against using state aid to fund companies. However, after a recent EC communication on risk capital, it has relented. The communication was the latest in series of measures the EU is putting in place to aid the development of a more efficient market for risk capital. (6.6.01)

Leicestershire County Council considers private equity
Leicestershire County Council is said to be investigating allocating a share of its pension fund to private equity. The local authority is looking for a gatekeeper manager to invest between three and five per cent of its £1.35bn fund. (22.6.01)

3i's European Technology Trust hit by tech fall
The collapse of global technology markets claimed another victim in the form of the 3i European Technology Trust. The trust unveiled a 53.8 per cent fall in its net asset value per share to 46.8 pence in the year to the end of April. The only solace it found was in outperforming its benchmark, a composite of the techMARK 100 and Neuer Markt Price Indices, which fell by 55.3 per cent over the same period. (29.6.01)

NewMedia SPARK posts poor results
NewMedia SPARK, the early stage technology investor, forced a grin as it announced a disappointing set of annual results and said there were signs that conditions were improving. The group unveiled pre-tax losses of £46.3m in the year to the end of March, compared with a profit of £2.8m the previous year. The devastation inflicted on the company by the dot.com collapse was starkly exposed in the 45.5 per cent fall in SPARK's net asset value per share, put at 42 pence compared with 77 pence at the same point last year. The group has now written off £73.7m on investments in its portfolio, an additional £8m from the amount announced at the time of interim results in December. (15.6.01)