Doughty Hanson to float €1bn investment vehicle

The London-based private equity firm is to raise money in the public markets by launching a vehicle that will co-invest alongside its real estate arm.

Doughty Hanson is to float an investment vehicle on the Euronext Amsterdam stock exchange that will invest 80 percent of its capital in buyouts and real estate.

The private equity firm hopes to tap the markets for €1 billion ($1.2 billion) by listing Doughty Hanson & Co Investments L.P. in order to fund acquisitions.

Doughty: co-investing with real estate fund

The publicly traded vehicle will make co-investments alongside Doughty Hanson’s private equity fund and its real estate holding companies. This represents a departure for the group which up until now has kept its private equity and property investments mainly separate.

Doughty, which was co-founded by Nigel Doughty, is contributing €40 million in cash to the vehicle. If the fundraising goes particularly well, it can issue an additional allotment of shares up to 15 percent of the total value of the fund. This would give it as much as €1.15 billion. However it is thought there is a hard cap on the fundraising of €1.5 billion.

At least 80% of the proceeds will be invested in Doughty Hanson’s funds and co-investments in portfolio companies as well as real estate.

The other 20% will be invested in opportunistic investments.

The company employs 48 investment staff in London, Frankfurt, Luxembourg, Madrid, Milan, Munich, Paris and Stockholm and sponsors two real estate funds with over $1.3 billion of commitments overseen by John Howard. According to banking sources, Doughty Hanson is also beginning fundraising efforts for a €2.5 billion private equity vehicle next month.

The second real estate vehicle, Doughty Hanson & Co European Real Estate II, closed in July with commitments of €560 million targeting investment and development opportunities in France, Germany, Italy, the UK and the Nordic countries.

The firm suffered a blow last year when big hitter Marc Mogull, a founding partner of the real estate arm, left to form his own firm, Benson Elliot Capital Management.

By listing a fund, Doughty is following in the footsteps of Kohlberg Kravis Roberts (KKR) and Apollo, both of which chose the Amsterdam exchange to raise money.