SEP to reveal Europe's biggest fund of the year after raising GBP 160m

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(Scotland on Sunday Via Thomson Dialog NewsEdge) VENTURE capital company Scottish Equity Partners is expected to announce tomorrow that it has raised the biggest fund in Europe this year.

A number of blue-chip investors have poured GBP 160m into the fund - significantly higher than the GBP 120m initially targeted.

It will be re-invested mainly in emerging technology, healthcare and energy-related companies, including SEP's first forays into mainland Europe.

The Glasgow-based company is already the biggest independent venture capital firm in Britain and its growing reputation has won support from investors such as Swiss Re, Skandia, Etera Mutual Pension Insurance Company (Finland), Gartmore and Finama.



They have contributed to SEP III, which was launched earlier this year and has now closed oversubscribed. Current investors in SEP funds include the European Investment Fund (EIF), Foreign & Colonial Private Equity Trust and Royal Bank of Scotland, who are also understood to have invested in the new fund.

It will mark the second time in five years that SEP has raised a fund in excess of GBP 100m - a considerable achievement for a company that until 2000 was the investment arm of Scottish Enterprise.

Its biggest returns have been made on investments in companies such as Stagecoach and Wolfson Microelectronics. In the case of the latter it made an astonishing 70 times its original investment when the firm floated on the stock market.

This latest fund should allow SEP to invest in another 20-30 companies. Calum Paterson, managing director, was delighted with the outcome.

"Fundraising has gone very well and we have ended up oversubscribed and above target, which reflects positively on our investment team and strategy," he said. "Our objective was not to raise as much money as possible but to cap the fund at a sensible level relative to the market we operate in. We have attracted a much broader investor base than in previous funds and that will stand us in good stead for the future." SEP, which also has offices in London, invested GBP 100m of the SEP II fund in 30 emerging companies. The latest fund will follow the same strategy.

"The UK is the most vibrant venture capital market in Europe, and our fundraising is a vote of confidence in the market as well as in SEP," Paterson said. "We have already identified a number of decent investment opportunities for the new fund and have a strong investment pipeline across all three of our core areas of focus." Paterson is delighted to have bucked the trend against a barrage of negative sentiment towards venture capital as an asset class. "In the context of European venture capital this is a very successful outcome and a great platform," he said, "It reflects very well on us." Paterson said he had identified a number of potential investment targets and that there is a pipeline of opportunities for the firm.

He was disappointed by comments from Nicol Stephen, the Enterprise Minister, who told a conference in Edinburgh that private sector financiers were hampering the drive to improve the number of start-ups by starving them of risk capital.

Stephen disagreed with those who said there was a shortage of good ideas and good management teams. The problem was a shortage of initial venture capital, he said. He was speaking to the Globalscot conference - an event staged for a network of expatriate Scots helping to bring business to Scotland.

Paterson said: "This is out of step with reality. We do not set out to avoid risk. On the contrary, we are looking to embrace risk, but we are selective about companies. We are still funding firms at the pre-revenue stage, anything from GBP 500,000."

Copyright 2006 Scotland on Sunday. Source: Financial Times Information Limited - Europe Intelligence Wire.
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