New Star enters private equity market

New Star Asset Management is pleased to announce that it is entering the private equity market through the creation of a fund of funds vehicle to be named New Star Private Equity Investment Trust PLC (“NSPEIT”).

NSPEIT will have an investment policy to invest in a diversified portfolio of private equity funds, predominantly exposed to mid-market buyout funds in the UK and Europe. NSPEIT will be formed from the proposed merger of August Equity Trust plc (“August”) and Rutland Trust PLC (“Rutland”) and the appointment of New Star as the ongoing investment manager. NSPEIT’s initial portfolio will comprise existing investments from both these funds as well as investments in listed private equity vehicles. In addition, NSPEIT will have commitments to existing, and seek to make commitments to new, private equity limited partnerships (“LPs”).

NSPEIT will be managed by an experienced team at New Star led by Paul Craig who has invested in a listed private equity vehicles since 2003 and generated a compound annual return from such investments of 21.7 per cent. from 1 September 2003 to 28 February 20071. An advisory committee will provide support to New Star through sourcing and assessing proposed investments in private equity limited partnerships. The advisory committee will be chaired by Michael Langdon, Chairman of Rutland Partners LLP.

Ravi Anand, a Director at New Star Asset Management, said: “Private equity provides an alternative source of equity returns for investors and is an important part of any diversified portfolio. We are pleased to have to been selected to manage this new vehicle, which as a fund of private equity funds provides investors with immediate exposure to private equity returns.

Including property and hedge funds, New Star’s offering to alternative assets will span three major alternative asset classes’ areas. Interest in alternative assets continues to increase. This has been recognised by APCIMS who are changing their benchmarks to include alternatives”.

Paul Craig, the proposed lead fund manager of NSPEIT, said: “We believe that private equity will continue to provide attractive returns relative to quoted markets as investors increasingly come to understand the dynamics that have driven the performance of this asset class. Exposure to private equity as an asset class in Continental Europe remains significantly below that of the UK and US and we expect this gap to narrow over time. The combination of adding listed private equity and commitments to other private equity limited partnerships to take advantage of this will add to the excellent performance of both Rutland and August and should provide attractive returns to shareholders”.