Schroders plc launches debut fund-of-funds

Fund

Schroders plc has announced the launch of its debut fund-of funds vehicle, Schroder Private Equity Funds plc, with a Euro 250-300m target. The Dublin-based vehicle will be structured as an Irish plc and will be managed out of London by Schroder Investment Management Ltd. The company is structured with three separate classes of shares: A, B & C, which are designed to appeal to different investor types. The Class A shares have a minimum subscription of Euro 125,000 and a management fee of 1.25%. The Class A shares carry a 5% performance fee for primary fund investments and 10% performance fee for secondary and direct investments; both performance fees are subject to an 8% hurdle. The minimum subscription fee is set to attract high-net-worth individuals (HNWI), rather than retail investors. The Class B & C shares are designed to appeal to small and large institutions respectively and therefore have slightly different terms and conditions. The minimum subscription fee for the Class B shares has been set at Euro 1m, with a management fee of 1% with 5% and 10% performance fees for primary and secondary/direct investments respectively, subject to an 8% hurdle. The Class C shares have a minimum subscription of Euro 10m and a management fee of 0.75%. No performance fees are charged for primary investments, although a 10% performance fee is charged for secondary and direct investments, subject to an 8% hurdle. Official sources report that the fund will adopt an over-commitment strategy of up to 130%.

Investors

The fund, which is currently in pre-marketing phase, will be marketed to HNWIs, small institutions and large institutions as noted above. To date, known investors in the fund include Schroders plc, which has made a cornerstone investment of approximately Euro 25m, and the West Yorkshire Pension Fund, which has committed £10m. The Schroder Group has set up a pre-commitment facility with an aggregate limit of Euro 160m thereby enabling commitments to be made to underlying funds before the fund-of-funds is closed.

Investments

Commitments have been made to funds including: CVC European Partners III, the Electra European Fund, Index Ventures II, Schroder Ventures European Fund II and the third Cinven Fund. The geographic focus of the vehicle takes the form of a 40-60% commitment to European funds, 40-60% to US funds and 10% to funds managed elsewhere. No more than 20% of the total raised will be committed to any single fund manager and no more than 50% of the investment capacity will be committed to underlying funds that hold a first closing in the same calendar year.

People

A dedicated team will run the fund-of-funds and this will include investment professionals from both Schroders plc and Schroder Ventures International Investment Trust plc. Further details of the management team have not, as yet, been disclosed.

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