Westport/Parallel alliance confirmed

Details of the alliance between specialist co-investment fund manager Parallel Ventures and adviser and fund-of-funds manager Westport Private Equity (formerly Crossroads UK), have been unveiled. Parallel Ventures, headed by Paul Whitney, has taken a majority holding in Westport, which earlier this year split from its former partner and founding shareholder Crossroads in the US.

The US firm had previously undergone a buy-in, and industry rumours point to serious strategic disagreements between the UK operation, headed by John McCrory, and the new US management.

The Parallel/Westport link offers considerable potential benefits for both parties. McCrory says the partnership offers Westport the chance to expand both its resources and funds under management and – perhaps alluding to earlier turmoil within Crossroads – adds: “It’s wonderful to be back focusing on building the company again.”

As well as advising UK pension funds with private equity exposure totalling around GBP500 million ($835 million), Westport currently manages some GBP100 million ($160 million) through two funds-of-funds dating from 1991 and 1994; its 1997-vintage vehicle was left on the table’ when Westport and Crossroads went their separate ways. Earlier this year, Westport launched a fund-of-funds to focus on European offerings, which is targeting GBP100 million ($167 million). So far, the vehicle has closed GBP22.5 million ($37 million) from three existing Westport clients. Because of the breakaway from Crossroads in Dallas and subsequent negotiations with Parallel, Westport has so far done little active marketing for the fund, which is aimed primarily at European investors.

The link with Parallel should open the way for Westport to expand its investor and client bases substantially, McCrory says, thanks to Paul Whitney’s contacts among larger institutions and pension funds’. McCrory also observes that Parallel is perhaps more aggressively focused on marketing than Westport has been to date.

Whitney says that by joining forces with Westport, Parallel Ventures expects to be able to offer its investors access to a wider range of products that it does at present. Parallel will maintain its focus on direct co-investment in mid-market European buyouts, but, through the partnership with Westport, would hope to build tailored joint proposals for clients wanting exposure to early-stage, technology or other specialist types of funds to form other planks of their overall investment strategy’. Another benefit from Parallel’s point of view is Westport’s experience and knowledge of the US market, something the younger firm lacks.

Parallel at press time was in advanced negotiations with potential management teams in Italy and France and hopes to announce at least one affiliation before the end of the year.

Marketing to large investors in the US and continental Europe is also ongoing.