Crescent plans third venture capital start-up fund in north
By Gary McDonald, Business Editor Irish News 23rd February 2010
Belfast-based private equity firm Crescent Capital is planning a third multi-million pound venture capital fund to provide seed cash for Northern Ireland start-ups.
Its two previous funds – Hambro NI Ventures launched in 1995 and Crescent Capital II in 2004 – spawned dozens of flourishing companies and led to the creation of 1,200 jobs.
But the sums pumped in then – £14 million and £22.5 million respectively – will be eclipsed by Fund III, which Crescent fund managers claim will raise up to £60 million.
And it is also proposing an innovative model of cloning Fund II but running a private equity-focused fund in parallel.
Crescent says the pre-marketing phase to the third as yet un-named fund has already started, and its team is preparing to speak to institutional investors in America and Scandinavia, as well as Britain and Ireland, ahead of its proposed launch in early 2011.
Central to its plans will be securing a Europe-wide tender which Invest NI is launching in the spring.
“We’re hopefully the economic impact of our two previous funds will stands by us as we not only bid for the tender, but knock on doors all over the world to raise up to £60 million,” said Crescent Capital’s managing director Colin Walsh.
“We made 12 investments in the first fund, including in companies like Andor Technology, which now floated on the Alternative Investment Market.
“That fund is now wound up, with all investment sold or distributed and with returns to investments of more than 8 per cent.
“It had a significant economic impact, with more than 1,000 people employed at the 12 companies we supported.”
Mr Walsh added: “In the second fund, which raised £22.5 million, we’ve made 12 investments to date, with two more to come, and two profitable exits have already been made.”
Investors in Crescent Capital two included Invest NI (£7.5 million), the Northern Ireland Local Government Officers’ Superannuation Committee (£6 million) and the New York State Common Retirement Fund, the second biggest pension fund in the US.
Although its input of £3.75 million was a mere fraction of its £66 billion worth, it was significant in that its sole trustee is Alan Hevesi, a long-term critic of employment practices in Northern Ireland, but who saw the fund as representing “an excellent opportunity for a competitive return”.
Among the investments made by Crescent Capital II was in APT, which was bought for £1.5 million and sold last April for £5.7 million.
University of Ulster economist Michael Smyth carried out an economic impact study of that fund, which revealed that it has created or maintained 380 jobs so far (including 135 in four companies operating in TSN areas), mostly in high-skilled technology companies, and is contributing £28 million a year to the northern economy.
Colin Walsh says: “As venture capital fund managers we’re real, and we’ve established a track record we believe will see us successfully tender to deliver the next fund, which should focus on investment in companies operating in the IT, life sciences and other high-end sectors.”
A spokesman for Invest NI told the Irish News: “Subject to board approval, we intend to go out to tender in the next couple of months to select fund managers for two new funds – a co-investment scheme and a development fund.
“The co-investment scheme would co-invest alongside Business Angels and seek to encourage the development of the Halo network.
“The proposed development fund will work alongside private investors to meet the gap in access to capital in the local venture capital market for investments between £450,000 and £1.5 million.”