Investec loan to fund DFJ’s management fees

Encore Ventures, a division of venture capital firm DFJ Esprit, has secured a loan of £8.2 million from Investec Private Bank to fund its expenses.

The two-year loan facility is intended to finance all the fees, set-up costs and legal expenses of Encore Ventures’ first fund Encore 1, which was established to manage the portfolio of early-stage investments acquired from 3i in October last year for £170 million.

The rationale behind the loan is to ensure that any capital drawn is used to buy assets rather than cover transaction costs, thus enhancing returns. Simon Hamilton, a partner at Investec, says the facility has ‘significantly improved the cash-on-cash return of the fund’.

Adds Hamilton, ‘We continue to see a move by leading [private equity investors and fund managers] in looking at ways they can maximise their returns by using the fund’s balance sheet.’

Typically, such loans to private equity funds are greater than £3 million and are structured against the investments in the fund, the management company’s cash flows or investor commitments.

Nick Britton

Nick Britton

Nick was the Managing Editor for growthbusiness.co.uk when it was owned by Vitesse Media, before moving on to become Head of Investment Group and Editor at What Investment and thence to Head of Intermediary...

Related Topics

Private Equity