Credit Suisse has launched a fund that will provide retail investors in Australia with the opportunity to directly invest in mid-sized unlisted companies in the United States and Western Europe.
According to Credit Suisse director of product development and management Peter Chun, the global private equity fund is the first fund available to Australians that will allow direct access to private equity investment in unlisted global firms.
He said the fund sourced its investment opportunities from its private equity arm, DLJ Merchant Banking Partners (DLJMB), targeting firms with market capitalisation between $20 million and $200 million.
Chun said the fund would acquire businesses in its target range and would actively assist in improving their performance by providing input at a board level, and then either on-sell them to realise gains or list them on the relevant stock exchange.
He expects distributions comprising realised gains and principal capital to be paid annually and possibly also ad hoc.
Chun said in the past such investments would have been beyond the reach of even very wealthy Australians as identifying and gaining access to private equity opportunities overseas is difficult.
The new fund has already been assigned a ‘recommended’ rating from Standard and Poor’s and a ‘buy’ rating from InvestorWeb.
Standard and Poor’s fund analyst Lee Comper said the fund allowed investors to access a manager whose previous funds have been in the top quartile in a form not normally available to the Australian retail investor.
“DLJMB has a strong management team, with each member possessing a wealth of experience and knowledge in private equity investing,” Comper said.
Comper said the investment carried a high risk, which should translate to the potential for higher capital growth.
He said investors should be prepared to commit their capital for the full 10-year term of the fund.
“As a general guide, investors should consider that on average it will take five years to realise any gains from a private equity investment, and thus start receiving proceeds through distributions,” Comper said.
The fund has a minimum investment of $25,000. It opens on March 31, 2006, and will close on May 31, 2006.
