Private Advisors is waving the white flag on its attempt to expand its private equity funds-of-funds business outside of North America, in yet another sign that investor appetite for the asset class remains muted.
Since the beginning of the year, the U.S.-based firm has seen three of its four-strong London-based team resign. This follows the decision to discontinue fundraising for both European and global funds of funds. The firm did not disclose a target amount on either of the vehicles.
Private Advisors opened its London office in 2008 and hired a team to run the global and European business. Matthew Baker, Jennifer Buckley and Rickard Fischerstrom were hired as managing directors that year, and the team was led by Jens Bisgaard-Frantzen, former CEO and managing partner of Danish pension fund-backed ATP Private Equity Partners. Fischerstrom remains in the London office, where he remains responsible for European business development and investor relations. Baker, Buckley and Bisgaard-Frantzen have yet to resurface (although Bisgaard-Frantzen’s LinkedIn account indicates he’s running something called Halkin Properties)
Beau Hurst, a partner based in the Richmond office responsible for business development and investor relations, says that “the decision to discontinue the European investment operation was driven by the economic climate and LP’s reluctance to commit to private equity given liquidity concerns.”
The goal, he said, had been to replicate the firm’s U.S. model in Europe. “We were seeking to launch a European small company buyout fund and a global private equity fund tilted towards the lower mid-market, but given the environment there wasn’t the appetite.”
Hurst stressed that the firm would continue to build relationships with European LPs, mainly Dutch and UK institutional investors, from its London office. “We already have European LPs and are very focused on this side of our business,” Hurst said.
Private Advisors is in the market approximately every two years with a new U.S. fund of funds earmarked for buyout firms that acquire small and mid-sized companies based in North America. Fund III closed in 2008 and was capped at $200 million. The firm also has a dedicated co-investment program. With the departure of the majority of the London-based team, Private Advisors will focus on North American fund commitments and will not be making any GP commitments in Europe.
Private Advisors was set up in 1997 by Lou Moelchert, an early advocate of alternative investments who managed the University of Richmond endowment for 30 years, and Rafael Astruc, who left last month. Today, the firm manages a total of $3.6 billion in hedge fund and private equity assets, with just over $900 million of that in private equity. It has 62 employees, including 19 investment professionals based in offices in New York, Richmond and London.
The story originally appeared in Buyouts Magazine