LGT buys European Capital in private debt play

The European secondaries investor has acquired a 20-strong team and management of private debt funds with assets of €700m.

LGT Capital Partners, a European alternatives manager with more than $55 billion under management across private equity, real estate and hedge funds, has acquired European Capital.

European Capital manages two private debt funds and a private equity fund, according to its website. The firm completed a final close on its European Capital Private Debt Fund in April, raising €473.5 million. The group also has a £100 million ($122 million; €116 million) fund focusing on UK-based SMEs; the European Capital UK SME Debt Fund received a £50 million investment from the British Business Bank in September 2014.

The acquisition announced on Friday “encompasses all private debt funds managed by European Capital and a team of more than 20 specialists,” according to a statement from LGT. It was unclear at press time whether the deal includes European Capital Private Equity Fund I, which according to the firm’s website is a €100 million secondaries fund that acquired stakes in seven portfolio companies in 2016 and is not making any new investments.

LGT is best known for being an investor in private equity funds – both primary fund commitments and secondaries – and around half of its assets under management are in private equity. It manages $800 million through its real estate fund investing programme and $9 billion in hedge funds and $4 billion in insurance-linked investments, according to its website.

The firm hit the target for its Crown Global Secondaries IV in November, raising $2.5 billion for the vehicle, as Secondaries Investor reported.

“After developing the business as a team over the last 11 years, we are very pleased to join LGT Capital Partners,” said Juan Carlos Morales Cortes, a partner at European Capital, in the statement. “We are convinced that LGT Capital Partners’ reputable, international platform will enable us to jointly accelerate the growth of the private debt business.”

European Capital is owned by American Capital, which was acquired by Ares Capital in May last year. That deal was reportedly worth $3.4 billion.

At this stage it is unclear how LGT plans to develop its private debt offering. Spokespeople from European Capital, LGT and Ares did not respond to calls seeking further comment by press time.