EUROPE NEWS: Doubts end Doughty

Ever since the May passing of Nigel Doughty, co-founder of private equity real estate firm Doughty Hanson, the London-based firm’s aspirations to further grow its real estate platform has been open to question. Last month, those questions were answered as Dick Hanson, head of private equity and executive chairman, finalized a strategic review, the outcome of which is that real estate and technology will no longer be pursued via further funds.

Stephen Marquardt, chief executive officer, said in a statement: “We have spent considerable time speaking with our investors and reflecting on the future of the business.  While we have had notable successes in both real estate and technology ventures, the real heritage of Doughty Hanson lies in its private equity business, where we have an outstanding track record.”

Observers noted that the writing has been on the wall for Doughty Hanson’s real estate division for some years. The firm tried and failed to raise a third European-focused real estate opportunity fund, meaning that the last vehicle it raised came as long ago as 2006. That was the year it closed Doughty Hanson Real Estate Fund II on
€590 million – one year after former real estate head Marc Mogull went on to form his own firm, Benson Elliot Capital Management.

Doughty Hanson said its real estate team, led by Julian Gabriel, will remain in place as it manages through its second European opportunity fund, slated to expire in December 2016 and currently projecting an equity multiple of 1.2x. While investors would not be losing money, it would mark a stark contrast to the performance of its first opportunity fund, which began investing in 2000 and ended up generating a 42 percent gross IRR and a 4.1x equity multiple