Summit Raises First European Fund
Firm has made eight investments in seven European countries over the last seven years.
April 28, 2008
Summit Partners said Monday it has closed a new European private equity fund with €1 billion of commitments, marking the Boston firm’s first exclusively-dedicated European investment vehicle, and wrapped up fundraising for its latest mezzanine debt fund at $825 million.
Eighty percent of investors in both funds were comprised of limited partners in previous Summit funds, and were located in Asia, Europe and North America. The limited investors in the European fund included BP Investment Management, HarbourVest Partners, Irish National Pensions Reserve Fund and LGT Capital Partners, while its investee partners in the subordinated debt vehicle included the California State Teachers’ Retirement System, Minnesota State Board of Investment, Performance Equity Management and Virginia Retirement System.
“Our core strategy, which we have pursued for 24 years, is to provide private equity and venture capital for growth companies,” said Tom Roberts, a managing director at Summit Partners. "What’s really become clear over this last fundraising effort is the investor demand for the space we occupy between traditional venture capital and the large LBO shops,” he added.
The new fund will aim to make 20 to 25 equity investments, ranging from commitments of €40 million to €50 million per deal. But, the firm has the capability to deploy €100 million or more in its deals, as well as supplement its European transactions with capital from its US funds, according to Roberts.
Summit, a firm with 80 investment professionals spread between offices in Boston, Palo Alto, Calif., and London, oversees 10 equity funds. It is known for making both buyout and growth equity transactions in companies that operate across a broad industry spectrum, including the technology, financial services, consumer and industrial products, energy, healthcare, life sciences, Internet and information services as well as media and entertainment sectors.
“Given our success with investments such as Jamba!, SafeBoot Holdings and Web Reservations International, we aim to grow our European presence significantly in the coming months and years,” said Scott Collins, a managing director at Summit Partners who launched the firm’s London office in 2001.
Summit plans to increase its size of its existing staff in London, strengthening its focus on growth equity deals in Europe, from its current number of 15 investment professionals.
Although the European fund was raised to focus on deals across the region, Summit is familiar with the complexities of dealmaking in Europe. Over the last seven years it has invested capital in eight investments in seven countries, including Denmark, France, Germany, Holland, Ireland and the UK. In November 2007, Summit Partners completed the $350 million sale of SafeBoot Holdings to Santa Clara, Calif.-based technology security company McAfee following an investment in the Netherlands-based company two years earlier.
Last year, Summit made two cross-border investments in deals involving Saint-Denis, France-based Internet event producer Vente-Privee.com and Welltec International, an Allerod, Denmark-based provider of technology for oil and gas well drillers.
Roberts said the firm is also looking closely at Eastern Europe because of its growth prospects and growing economies.
Summits’ subordinated debt fund, meanwhile, will follow the same strategy as its predecessor funds by co-investing alongside the firm’s equity investments in select cases. The new fund, which is its fourth raised in the last 24 years, will invest in transactions that require a minimum equity investment of $5 million up to $500 million, or deploy subordinated financing in transactions valued at more than $800 million in mezzanine debt and equity combined.
“There’s a good opportunity for investing sub-debt in attractive growth companies that simply can’t get traditional financing from the banks because of the credit squeeze,” Roberts said. “Given the dislocation in the credit markets, we can put a strong offer on the table.”
Summit's new mezzanine fund well eclipses its previous $465 million subordinated debt vehicle.
The investment firm bolstered one area of its debt operations last summer when it hired Morgan Stanley financial sponsor banker Alexander Whittemore to serve as director of capital markets.
In the last 24 years Summit has deployed capital in close to 300 businesses, and now manages more than $11 billion in assets with the inclusion of its two new funds, and taken almost 125 portfolio companies public.
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