Investec’s Specialised Lending division has been piloting a scheme since the start of 2009 and has closed six transactions and provided more than £64 million in loan facilities to a number of private equity professionals and private equity firms in the UK, continental Europe and Australia.
Typically, the loan sizes are between £2 million and £25 million and are structured against the private equity investments, management company cash flows or investor commitments. Due to demand for these types of lending facilities, Investec has decided to launch a dedicated service to private equity professionals and organisations operating and investing in the sector.
Facilities are aimed at private equity professionals (general partners) requiring leverage to invest in their own funds; to facilitate the buyout of cornerstone investors in the management company; or to facilitate other opportunistic transactions. For investors in private equity funds (limited partners) facilities can be used to fund their commitments to a fund or to create liquidity to enable diversification into other opportunities. For funds themselves, facilities can be used to fund the development costs associated with the launch of new funds; enhance returns and create administrative efficiencies by bridging investor commitments.
Simon Hamilton of Investec Private Bank said: “Given current economic environment, and structural changes in the private equity sector, more General Partners and others involved in the private equity sector are looking at ways to raise finance for a variety of different purposes. We’ve seen particular interest from General Partners who are acquiring stakes in their management company’s from cornerstone institutional investors. Also from those who see the current environment of distressed valuations as an opportunity to launch new funds and to purchase commitments from distressed Limited Partners at a discount.
“We have no predefined lending parameters and each deal is structured to the client’s unique requirements. This has enabled us to be flexible and to structure each deal around the rapidly changing environment. We believe that this will be a major growth area for us over the next 12 months and beyond.”
Recent deals by the new Private Equity Partner and Fund Finance team include:
- Finance to facilitate a General Partner’s commitment into their own fund
- General Partners’ purchasing commitments from distressed Limited Partners at a discount
- Finance to facilitate the acquisition of shareholdings into the management company from cornerstone investors by the individual General Partners
- Development capital finance for the establishment of follow-on funds
- Facilities to family offices to provide liquidity to facilitate future draw down calls or diversification of portfolios
Investec also offers a range of unique lending facilities including Strategic Shareholder Finance and Sport and Media Finance.