Investec Private Bank’s private equity partner and fund finance team has provided a GBP8.2m loan to Encore Ventures, a new division of European venture capital firm DFJ Esprit.
The two year loan facility financed all the management fees, set-up costs and legal fees of Encore 1, Encore Ventures’ first fund, which was established to manage the portfolio acquired in October 2009 from 3i for GBP170m.
Investec’s loan facility was structured to enhance the returns of the limited partners by ensuring that any capital drawn was used to buy assets rather than cover transaction costs.
DFJ Esprit’s Encore 1 fund is backed by Coller Capital and HarbourVest Partners and includes a significant number of European technology and healthcare-centric companies including Icera Semiconductors, Light Blue Optics, ApaTech, The Cloud, CamSemi and FastBooking.
Simon Hamilton, private equity partner and fund finance, Investec Private Bank, says: “We were delighted to be involved in one of the largest and most significant secondary trades of 2009. The flexibility of our funding allowed the LPs to respond to the changes encountered when buying the Encore portfolio and our loan facility significantly improved the cash-on-cash return of the fund.
"We continue to see a move by leading GPs and LPs, such as Coller Capital and HarbourVest, in looking at ways they can maximise their returns by using the fund’s balance sheet. Having a specialist team at Investec enables us to understand and implement these types of structures.”
Brian Robertson (pictured), partner, DFJ Esprit, adds: “Putting together complex deals in a competitive secondary market often requires innovative thinking and Investec’s knowledge of the market and flexibility allowed us to maximise the returns to investors.”
