LONDON (Reuters) – Private equity firm BC Partners said on Thursday it is to investigate opportunities to acquire debt as it unveiled a new senior management team.
London-headquartered BC Partners said Jens Reidel is retiring from his position as chairman with immediate effect. He is to be succeeded by Francesco Loredan and Raymond Svider who will be co-chairmen.
Reidel, who has been chairman since 2004, will still serve on a number of company boards as well as advising the firm, which has about 10 billion euros of funds under management.
BC said it has appointed debt expert Jonathan Hosgood to pursue opportunities in credit and has received approval from its investors to invest in debt securities. Hosgood will join BC Partners in February from Barclays Capital.
Corporate debt has been picked out as one of the best bets for 2009 by a series of investment strategists.
As large buyout deals have dried up due to the lack of bank debt, private equity firms have started to show an interest in acquiring senior debt in stable, cash generative firms that offer value and are typically trading at 40 percent to 60 percent of face value. For a related story, see: [ID:nLL158441].
Speaking at a briefing for the press, managing partner Andrew Newington said the firm would principally look to buy debt in its own portfolio companies, but would also consider opportunities to buy debt in other companies.
“We have told our investors we may invest nothing or we may invest and few hundred million,” Newington said.
The investment will come from the firm’s eighth buy-out fund, which closed in 2005 at 5.9 billion euros. Some 54 percent of that is now invested in nine portfolio companies, including estate agent Foxtons and boiler maker Baxi.
FOXTONS A “MISTAKE”
As companies across consumer-oriented industries begin to suffer in the face of the rapid cooling economy, BC said, with hindsight, the acquisition of Foxtons had been a mistake.
“Obviously we made the wrong call on the market,” Newington said. He also said the company had factored in a possible 30 percent decline in market volumes in 2008 but not the 60 percent to 70 percent declines that had actually occurred in London.
UK building society Nationwide earlier this week revealed house prices had shown record declines in 2008, down 15.9 percent on the previous year.
BC acquired Foxtons for about 390 million pounds in May 2007 before the UK housing market began to cool, though Newington said the deal included a element contingent on performance objectives which have not been met.
While Foxtons has not met bank targets on interest cover and debt-to-earnings set at the time of the takeover, Newington said BC is in talks with lenders Mizuho Financial Corp (8411.T) and Bank of America (BAC.N) and may invest more cash into the real estate chain under the right circumstances.
“We would be prepared to back a capital structure more suited to the current environment,” he said.
Newington said Foxtons represents only 1 percent of the firm’s committed capital and so will have a limited impact on overall fund performance.
BC Partners also announced the appointment of Charlie Bott, former Goldman Sachs partner and chairman of its financial sponsors group in Europe, as managing partner and co-head of investor relations. He will work alongside New York-based Kevin O’Donohue until his retirement at the end of 2009.
By Simon Meads
(Editing by Andrew Macdonald)