Guidance for the good

Industry practitioners and corporate veterans want to fine-tune the leadership skills of charity chiefs

The Private Equity Foundation (PEF), a UK venture philanthropy fund backed by private equity firms, advisers and banks, has joined forces with Deutsche Bank to form the Full Potential Leadership Programme: a leadership training initiative for the chief executives of PEF's portfolio charities.

The nine-month course includes time in residence at INSEAD, the international business school, and will guide charity bosses on a wide range of business themes, from sales and marketing to governance and change management.

“Just as private equity firms back their chief executives,” says PEF chief executive Shaks Ghosh, “at PEF we back the amazing social leaders we have running our portfolio charities.”

The course has been put together with pro bono input from training consultancies Armstrong Management Group and Egon Zehnder International, course sponsor Deutsche Bank, law firm Kirkland & Ellis and consultancy Monitor Group.

PEF's charity bosses will receive tuition from corporate veterans Tony De Nunzio, the former 12-year chief executive of UK supermarket chain ASDA and current executive chairman of Kohlberg Kravis Roberts-backed Dutch retail group Maxeda, and Lord Clive Hollick, a veteran of the media industry and currently a managing partner at KKR.

PEF was created with the mission of empowering young people and has so far invested in 14 charities in the UK and Europe. Its latest commitment, a £530,000 (€601,000; $792,000) donation – plus pro bono guidance – to London-based Vital Regeneration will over the next three years help hundreds of disadvantaged young people through a unique mix of music production, event management, literacy improvement and personal development.

“By helping our executives achieve their potential, ultimately each charity will be better positioned to empower more young people to reach their potential,” says Ghosh.

Venture philanthropy involves applying the rigorous principles of efficient management and organised, accelerated growth – as practised by all good private equity firms – to non-profit organisations. It is about ensuring that where a financial contribution is made, help is provided to squeeze every possible bit of value out of it and pave the way for future fundraising: vital in these times of more limited resource.

Peter Moon is stepping down as chief investment officer of the UK's second largest pension fund, the University Superannuation Scheme (USS), after 17 years with the pension. His future departure will further a trend of senior management changes at large pensions. In February, the private equity chief for the California State Teachers’ Retirement System, Réal Desrochers, retired, while in January, the California Public Employees’ Retirement System named Washington State Investment Board's executive director, Joseph Dear, as chief investment officer, following the departure of Russell Read.

Paris-based investment firm Eurazeo recorded a net loss of €61 million for 2008 despite its revenue growing 35 percent year-on year to more than €4 billion. The loss was partly due to a lack of “significant disposals” in 2008, chairman of the executive board, Patrick Sayer, said at a results presentation. In 2007 it achieved a profit of around €890 million partly from the sale of stakes in Eutelsat Communications and transport company Fraikin. Sayer said the firm remains “robust” and it has “remained true to its business model” and free of structural debt.

Two UK private equity firms have agreed to manage government-backed investment funds as part of an initiative to support small British businesses. Aberdeen Asset Managers Private Equity and Octopus Investments will manage £30 million (€33 million; $44 million) each as part of a £75 million investment mandate from the government's Real Help for Business programme granted via the Capital for Enterprise fund which launched in January.

The management team of Robert Dyas, a UK-based hardware retailer formerly owned by private equity firm Change Capital Partners, has finalised a buyout of the business. Financial details have not been disclosed, but the deal is understood to value the business at around £30 million (€33 million; $44 million). Change Capital, which was founded in 2003 by former Marks & Spencer boss Luc Vandevelde, has had to walk away from its investment, writing off around £28 million.

The European Bank for Reconstruction and Development has approved commitments totalling €100 million for Central and Eastern Europe-focused mezzanine funds. The development finance institution has given board approval for a €50 million commitment to the second vehicle from mezzanine specialist Syntaxis, a spinout from pan-European mezzanine provider MML Capital. Syntaxis Mezzanine Fund II is targeting €250 million with a hard cap of €350 million. The EBRD has committed a further €50 million to Accession Mezzanine Capital III, a fund managed by Mezzanine Management Central Europe, an affiliate of MML Capital. The fund has a target size of €350 million and a hard cap of €400 million.

UK- and Italy-focused Merrill Lynch spinout BlueGem Capital Partners has struck its fourth deal from its €205 million debut fund, with an agreement to inject £17.3 million in struggling investment bank Panmure Gordon. The London-based investment bank and stockbroker, which dates to 1876, said the private placement would substantially strengthen a balance sheet that has suffered from lower stock market volumes and price drops as well as reduced investment banking revenue.

London-based Kennet Partners has led a €15 million Series D funding round for private members shopping website BuyVIP. New investor Kennet committed more than €11 million to the round, while the rest came from existing BuyVIP investors Bertelsmann Digital Media Investments, 3i Group, Molins Capital Inversion and Active Capital Partners.

Litorina Kapital, the Swedish lower mid-market private equity firm, has netted a 10x cash return on the sale of logistics group LGT Logistics Holding. Financial details were not disclosed, but a source close to the situation valued the transaction at around SEK400 million (€37 million; $50 million). LGT was bought by Axcel, another Nordic private equity fund, in a rare secondary buyout. Axcel is currently investing from a DKK 3 billion (€400 million; $542 million) vehicle, Axcel III, it closed in early 2006.