ABN AMRO Mezzanine II exceeds £150m at final close

ABN AMRO Mezzanine announced on 16 October the final close of The Second ABN AMRO Mezzanine Partnership LP, with commitments made of over £150m. The fund held a first close in November last year on £105m. Both Fund I and Fund II are Guernsey-based.

Investors

Fund II received a cornerstone investment of £50m from ABN AMRO. The rest of the money has been sourced through a combination of limited partner commitments and co-investor arrangements, which depending on the deals that are done will make the amount of capital available to the fund considerably over £150m. Investments have come predominately from institutions on the European mainland, but also from Canada and the UK. Investors included pension funds, financial institutions and one high-net-worth individual. When asked about fundraising conditions in the year since the first close Barrie Moore, managing director at ABN AMRO Mezzanine, said that it had been particularly challenging to raise the money in such a ‘nervous’ market.

Investments

Fund II looks likely to follow in the footsteps of its predecessor, holding its ground as a strictly middle-market player. The management has set a maximum underwriting limit of £30m in any deal and will generally look to invest between £3m and £30m in transactions with an enterprise value of up to £250m. The fund will not be targeted at any specific sector and will focus on investments in the UK and Western Europe. Moore is expecting the next three to six months to be a great time for mezzanine finance, his reason being the continuing constriction of the debt markets due to the increased conservatism amongst banks scared by the threat of recession. Moore adds that the current economic climate seems reminiscent of the early 1990s, which was also a good time for mezzanine investment. He predicts that around 60% of the fund will be invested in buyout situations, with the remaining 40% invested as development capital, re-capitalisation finance and in quoted companies. Fund II will look to be as innovative as possible in its investment, taking an equity stake in the majority of transactions. With regards to exits, it is expected that most exits will be through trade sales, or flotations if possible. The fund has an investment period of 4 years and no investments have been made as yet. Fund I, however, is now fully invested with a portfolio of 15 companies, amongst them Epwin Group plc and Sanctuary Group plc.

People

The fund is managed by ABN AMRO Mezzanine (UK) Ltd, ABN AMRO Capital’s specialist mezzanine provider. The investment team is four-strong and is headed by Barrie Moore (managing director). The other members of the directorial team are Bruce Thomson, who joined in August this year, Tina Sharpe and John Sealy.

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