News & Analysis

RBS offloads tail-end stake to LGT

With the implementation of the Volcker Rule just 12 months away, banks are increasingly under pressure to reduce their private equity holdings.

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Royal Bank of Scotland has transferred its entire interest in a UK-focused venture capital fund to LGT Capital Partners, according to a UK regulatory filing.

The bank sold its stake in the £160 million ($208 million; €188 million) Scottish Equity Partners III (SEP III), held by its Royal Bank Ventures Investments entity. LGT used three funds to acquire the stakes: Crown Growth Opportunities, Crown Growth Opportunities II and Crown Global Secondaries III. The transfers represented a total capital contribution of £75.

The deal closed on 10 June, according to the filing.

SEP III is a 2006-vintage venture capital fund has invested in biotech, life science, cleantech, renewable energy, oil and gas, healthcare, and technology, media and telecommunications in western Europe, according to PEI Research & Analytics.

The fund has made 23 investments, of which 13 portfolio companies had been exited by March 2016, according to meeting minutes from Glasgow City Council, which manages the Strathclyde Pension Fund.

Crown Global Secondaries III, held a close on $2 billion, above its $1.5 billion target in 2013. Half of the fund’s investors are based in continental Europe, 19 percent in the Asia-Pacific, 14 percent in North America, 12 percent in the UK and 5 percent in the Middle East, according to LGT’s website.

Crown Growth Opportunities and Crown Growth Opportunities II are both a type of collective investment vehicle known in western Europe as société d’investissement à capital variable (SICAV), which is similar to an open-ended fund. Their size and vintage years were unclear.

The Volcker Rule, which limits US banks’ balance sheet investment in private equity is only 12 months away is pressuring banks to sell off their stakes in private equity, after a break from selling last year, Secondaries Investor reported earlier.

Switzerland-based fund of funds manager LGT has $50 billion in assets under management, according to PEI data.

LGT, RBS and Scottish Equity did not respond to requests for comment before press time.