LONDON (Reuters) – Hermes Fund Managers, which is owned by the UK’s largest pension fund, said on Monday it is to exit direct private equity investment to concentrate on its fund of funds business.
Hermes said it has appointed European mid-market private equity firm Bridgepoint Capital [BRDG.UL] as manager of Hermes Private Equity Partners II and III — its vehicles dedicated to making direct investments in companies.
“This is a strategic move, allowing us to increase the focus on private equity fund of funds activities which best meet our clients’ needs whilst transferring the management of our direct private equity to an excellent home,” said Hermes chief executive Rupert Clarke.
Hermes’ ten-strong direct investment team will transfer to Bridgepoint and operate as a separate business division under the Bridgepoint Development Capital banner. Rod Selkirk, chief executive of Hermes Private Equity, will head the division and become a partner in the firm.
The new division will have 550 million pounds ($779.9 million) of funds under management and will focus on transactions valued at less than 100 million euros ($132.3 million), below Bridgepoint’s deal investment threshold.
“Our principal investment focus remains on transactions between 200 million and 1 billion euros,” said Bridgepoint managing partner William Jackson.
“But it’s very clear that there are also attractive investment opportunities in the smaller buyout market across Europe, and the formation of Bridgepoint Development Capital enables us to capitalise on those,” he added.
Hermes’ Susan Flynn will continue to lead the BT pension fund’s private equity fund of funds business, managing 1.7 billion pounds of assets.
Hermes is owned by the BT Pension Scheme (BT.L) which has some 39.7 billion pounds in assets under management. (Reporting by Simon Meads; editing by David Cowell)