Doughty Hanson abandons €2bn buyout fundraising

Doughty Hanson, one of Europe's oldest private equity groups, has abandoned plans to raise money for its latest buyout fund after it failed to win enough interest from backers.

in a statement on Tuesday, the group blamed "continuing uncertainty for both employees and investors" for the decision to scrap the €2bn fundraising.

Doughty's managers will focus instead on realising the value of company investments in its current buyout funds, the group said.

"We have reflected on several years of discussions with existing investors and, while today's announcement is disappointing for those investors that have committed to the current fundraising efforts, it pre-empts further prolonged uncertainty," said Stephen Marquardt, chief executive.

Mr Marquardt added: "We will now enter into a period of review with our employees and investors to explore the possibility of another fund in the future."

The move is a rare admission of defeat in the market for private equity managers raising money from institutional investors.

More than 2,200 funds are raising money currently, a record number according to Palico, a data provider.

But investors have become more discriminating about the number of groups that they actually want to work with as capital has flowed into the industry.

Private equity funds typically lock up their money for several years versus more liquid asset classes, leading investors to look more at the long-term prospects for managers.

Fundraising for the sixth buyout fund by Doughty, launched in late 2013, dragged after a tumultuous recent history at the group, which spun out from Standard Chartered in 1986.

The group previously raised money in 2007 and made its most recent investment in 2012, the year that one of its founders, Nigel Doughty, died suddenly of a heart attack.

Aged 54, he was the group's majority shareholder and owner of Nottingham Forest football club at the time.

Mr Doughty's death led to a year of restructuring at the company, which became a partnership under fellow co-founder Richard Hanson.

It refocused on buyouts and abandoned attempts to diversify into venture capital and real estate.

Doughty's existing buyout funds still have untapped value to release within investments including Eurofiber, a Dutch fibre network, and Balta, a carpet maker.

Its fifth fund, raised in 2007, is valued at 176 per cent of investors' paid-in capital versus distributions so far worth 96 per cent.

In January, Terra Firma, the private equity group founded by Guy Hands which has also not raised a buyout fund since 2007, said it would use €1bn of its own money to invest on a deal-by-deal basis alongside investors.

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