Fidelity has $500 million to spend
It may be a new entity but it’s armed with a $500 million (£245 million) fund to spend on buy-out opportunities in the mid-market. The team includes Sebastian McKinlay, formerly of Promethean Investments, and Brooke Ablon, who was previously a partner of US private equity (PE) fund The Riverside Company, before joining to spearhead FEP’s North American operations.
‘We’re looking for high-growth companies, achieving a minimum of ten per cent organic growth per annum,’ says Martin.
FEP opened its European head office in London earlier this month. The idea behind it is to complement Fidelity Ventures, which operates as a typical venture capitalist (VC), taking minority stakes in what are usually embryonic pre-revenue businesses.
‘We’re concentrating on established entities and are looking to take controlling stakes,’ says Martin. ‘In some ways we’re picking up where Fidelity Ventures left off. In a sense, Fidelity Ventures invests in the makers of systems, whereas we invest in the companies that use the systems.’
While Martin says joint investments between the two divisions won’t be the norm going forward, it’s happened in relation to Asset Control, a Dutch software supplier to asset managers. Rob Kettersen, who overseas FEP and Fidelity Ventures, says that this ‘company fell between the normal VC and PE spheres’.
He continues: ‘Where we want to move into used to be the bread and butter for private equity firms, but they’ve now moved away to do the bigger deals.
With its headquarters in London, FEP will be looking for deals in the technology and communication sector throughout Europe, with the UK, Ireland, Holland, Germany and Scandanavia being the current hotspots.
Says Martin: ‘Given that we’re part of Fidelity, we don’t have any institutional investors or rounds of fundraising to go through.
‘We’ll be looking to make 10 to 12 investments over the next two to three years at an average value of £25 to £75 million.’