News – UOB, Greenoak Launch Euro Fund-of-Funds

Intending to capitalize on the support new European public equity markets have begun to provide entrepreneurs, UOB Global Capital LLC, a member of the United Overseas Bank Group of Singapore, and Greenoak Capital Management Ltd. of London joined forces last month to launch a fund-of-funds with a euro300 million target.

While much private equity attention in Europe has keyed on large-scale buyout opportunities, UOB Greenoak European Private Equity Fund will focus on investments in funds that target investments in middle market companies.

“With the development of the concept of shareholder value becoming accepted in Europe, you will see more companies spinning off non-core assets, and more managers buying them out,” said David Goss, managing director at UOB and a board member of the new fund.

The model portfolio for the fund will consist of approximately 15 funds with ten commitments to middle market firms, three commitments to pan-European buyout firms and two to venture-stage funds. Goss said the growth of new exchanges in Europe, such as the Neuer Markt in Germany, and the recent SEC ruling permitting American companies to list on the Easdaq, present opportunities for expansion stage investments.

“We are starting to see a secondary market develop that will allow the brains that have always been in Europe to stay home,” Goss said. “And over time, that will bring in a secondary market.”

In addition to making primary commitments, Goss said the two sponsors have reserved the right to invest as much as 25% of committed capital in secondary commitments and as much as 25% in co-investments with primaries.

The new fund will target existing customers of UOB and Greenoak as limited partners, and Goss said the firm expects to pull from four offices in Paris, New York, London and Singapore. In fact, he said Asian investors are increasingly looking beyond the region to invest.

“They have become particularly interested in Europe, which offers emerging markets returns within these developed economies,” Goss said.

The minimum investment to participate in the fund will be euro5 million and the annual management fee will be 1%. The firm will charge a 12% carry after reaching performance hurdles that, due to the three different investments the vehicle can make, fall in three stages – primaries have a 5% hurdle, secondaries 7.5% and co-investments 15%.

The fund has received cornerstone commitments of euro60 million from BT Pension Fund, the Post Office Superannuation Scheme and UOB. Gary Solomon of Greenoak said the goal for a first close is in the fourth quarter and a final close in approximately 12 months.