Hermes increases interest in private equity

21 May 2001

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Hermes Pensions Management, which advises the BT Pension Scheme, has announced further moves to increase its commitment to private equity investment. Last year, Hermes strengthened its private equity team in line with the Pension Scheme Trusteesâ€™ decision to increase the percentage of assets under management committed to private equity from 1% to 3%, amounting to some Â£700m. The company has now revealed that it has agreed to invest up to Â£35m in Botts Capital Partners II and at the same time acquire up to a 21% stake in Botts Holdings, the parent company of Botts & Co. Tony Watson, chief investment officer of Hermes, describes the investment in the Botts management company as a means of leveraging Hermesâ€™ investment in the Botts fund. Hermes currently has a dedicated fund-of-funds team of three and a direct investment team of three; however, the association with Botts will bring co-investment opportunities and increase Hermesâ€™ exposure to deal flow without the need for the company to further expand its investment team. BCP II is the successor vehicle to Botts & Coâ€™s first formal fund, BCP I, which closed on Â£150m in 1999. The new fund is targeting Â£300m and is expecting to hold a first close shortly.