The firm aims to create a community of ‘like-minded’ investors with the launch, claiming a first with the ‘common willingness and skills to back entrepreneurial businesses’, reports Matthew Hardeman
Stanhope Capital, the investment manager, has launched a new €100 million entrepreneur-led private equity platform - the Stanhope Entrepreneurs Fund (SEF) - to invest in European SMEs.
The fund is backed by five 'anchor investors’ - successful entrepreneurs set to help identify attractive investment opportunities.
Aiming to afford access to fast-growing SMEs across Europe and the UK, the fund focuses on development capital and buyout deals, with an emphasis on the consumer, food, education and disruptive services sectors.
Stanhope, which has approximately $10 billion under supervision, claims to be breaking new ground with the fund by seeking to add ‘true operational expertise’ to the portfolio companies, with the five entrepreneurs acting as the fund’s anchor investors, and, when required, active non-executive members on the boards of the portfolio companies.
Stanhope CEO Daniel Pinto told Spear’s that the SEF will also act as a forum enabling investors to have a say in the selection of portfolio companies, and will encourage them to bring ideas and attractive deals to the fund.
‘The shortcoming of the private equity world in general is that there are too many financiers and not enough entrepreneurs,’ Pinto said. ‘We start from the basis that the largest transactions are very well covered by the larger funds, when it comes to smaller transactions it’s a much less perfect market, it is much harder to find funds that have a good track record and we feel that we can do it ourselves. That’s the premise of the creation of the SEF.’
The firm named the five anchor investors as Bruno Moineville, founder of European telecom’s giant company Altice, Pierre Cuilleret, co-founder of Phone House (sold to The Carphone Warehouse in 2000), Leon Seynave, co-founder of online private sales company Vente-Exclusive.com, Mark Moran, the CEO who led the management buyout of Mater Private Hospital, and Pinto himself.
The launch forms only part of a recent expansion of services for Stanhope, a firm better known for its wealth management offering: it has grown its merchant banking arm with the hiring of Nigel Spray from Kleinwort Benson (now Kleinwort Hambros) to provide M&A advice.
Its private investment group has expanded its private equity and real estate vehicles with access to blockbuster names such as Blackstone and Advance investing in the largest deals. But for smaller transactions, Pinto says the firm is focused on creating ‘niche products, smaller funds we are managing ourselves, like the SEF’.
As Pinto says, it’s not a case of using an excel spreadsheet when looking to grow: ‘You need professionals, managers to roll up their sleeves and actually create the change, create the transformation and create the growth. Where the SEF is very different is that we are mixing the two elements… We have a very professional team in-house that have worked in private equity before. But we also have the anchor investors who are putting money in to launch the fund, alongside limited partners, but who are also willing and able to devote a good portion of their time to actually bring value to the portfolio companies.
‘It’s not just an issue of being an investor - it’s about being a coach to the companies and the management of these companies in which the fund is going to invest.’
Limited partners are also set to hold ‘much more’ rights than they would in a traditional private equity fund: it gives investors the possibility to opt out of one transaction in the lifetime in the fund - ‘to raise their joker’, as Pinto says.
‘We want to give every investor an opportunity to bring forward interesting investment ideas and deals. We incentivise them to do so by giving them a share of the performance fees on the deals they bring to the fund. This is a premiere in the world of private equity.’
Matthew Hardeman is assistant head of the Spear’s Research Unit