LPs remove Varova as manager of funds, write down €100m

The Varova funds have experienced a reduction of unrealised net asset value close to €100m, unquote" understands.

However the LP clarified that "in this case, unrealised value is a multiple of the cash invested".

Clearsight acted along with two other large LPs to remove Varova as manager of its investment funds. The LP told unquote": "We are not at liberty to divulge details due to confidentiality obligations. However, we would note that any decision to be made regarding a step as important as the change in management of a fund requires approval by a large majority of the limited partners in that fund."

Part of the reason for the removal was the failure of Varova's fashion buy-and-build platform Varova Fashion, operating under the brands Open32, Tumble n' Dry and Sissy Boy. Clearsight confirmed that the transferred portfolio "includes Varova Fashion Group, which also has a local fashion entrepreneur now becoming a shareholder". The fashion entrepreneur was reported to be Marcel van Gelderen by the Dutch financial press.

However, Clearsight added that "generally, we do not believe that portfolio underperformance alone is a sufficient reason to replace a general partner. We would like to stress that it is market standard that limited partners in private equity funds have the right to replace fund managers in certain situations. Clearsight is a conscientious investor and would only exercise the right to substitute a manager after careful consideration in coordination with all other limited partners."

Clearsight and Standard Investment continue to work with a number of members of the remaining Varova team on the current portfolio, according to a source. A member of the Varova team described it as a "very constructive process and relationship". 

Finally, a second source close to the situation claimed that this transaction means LPs in Varova funds will no longer have to pay carry to the manager. Clearsight declined to comment on this.

Clearsight is a fund-of-funds manager based in Switzerland. It is thought to manage approximately €800m, including the fund-of-funds Clearsight 3, which is thought to have a volume of around €300m.

The fund-of-funds manager was an investor in UK-based turnaround firm Endless's early funds.

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• Topics
• Fund-of-funds
• Benelux
• DACH
• LPs
• Turnarounds