Hermes FOF to raise external funds after direct team moves to Bridgepoint

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The ten-strong team of Hermes Fund Managers' direct investment portfolio will be moving to Bridgepoint by the end of May. They will operate as a separate division of the firm under the name Bridgepoint Development Capital (BDC), and bring with them two funds totalling £550m.

The deal leaves Hermes' core £1.7bn fund-of-funds business free to bring on board third-party clients, according to the firm's Delaney Brown. Following the move Susan Flynn will head up Hermes Private Equity and the remaining 9 person team. "The split of the activities gives clarity to the market and removes what was perceived as a conflict of interest," Brown says.

Hermes and Bridgepoint have worked closely together before, with Hermes' fund-of-funds business investing in three of Bridgepoint's buyout funds raised since 2000. Additionally, Hermes' Rod Selkirk will be heading up BDC as a partner, having worked at Bridgepoint from 1990-2002.

BDC will focus on buyout transactions valued below EUR100m. As Bridgepoint's buyout business focuses on businesses with enterprise values upwards of EUR200m, the two are seen as complementary. Following the deal, Bridgepoint will have EUR9.8bn under management, more than EUR5bn of which is available to invest in the next five years. This includes Bridgepoint Europe IV, a EUR4.8bn buyout fund closed last November.