TWO OF the founding partners in Compass Partners, the $1 billion private equity fund, have unexpectedly quit the firm by mutual agreement, The Times has learnt.
Paul Soldatos, previously a partner at Investcorp, the US firm, and John Clark, formerly chief executive of BET, left Compass before Christmas. The pair founded the partnership nine years ago to invest in international and European companies. Compass usually takes a controlling interest in firms that it backs.
The departure of the pair, who are said to have left to pursue other interests, leaves Stephen Walters, a former head of mergers and acquisitions at the firm, and Allen Yurko, the former chief executive of Invensys, the engineering firm, at Compass. The former engineering chief joined the partnership to increase the likelihood that the firm would be able to complete bigger deals. He was behind the takeover of BTR by Seibe.
The financial arrangement surrounding the departures is not known. A source said yesterday that it was business as usual at Compass, which holds investments in an array of European manufacturing companies. Its portolio includes investments in companies as diverse as Eco Group, which makes coils; Drake Beam Morin, a human resources company; and Electrolux Zanussi, which makes vending machines. The investors in the firm are thought to be American.
The departure of the two comes as commentators predict another record year for private equity investment across Europe. Last year Britain recorded its first drop in private equity investment since the dot-com bubble burst as cash-rich venture capitalists switched their funds into continental Europe.
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Private equity firms reduced their spending on UK acquisitions by 15 per cent last year, despite having record sums to invest. They doubled investment in continental Europe, from a record level in 2004. According to the most up-to-date figures, private equity firms bought 271 British companies for a total of €36.5 billion, down from €43.0 billion in 2004. They have increased their spending in Europe from €60.2 billion in 2004 to €108.4 billion.
Private equity firms are thought to have raised capital of £250 billion in leveraged buyouts in 2005 — about 50 per cent higher than the previous record in 2000. The sum is more than the record $94 billion amassed in the whole of 2000, as firms such as Carlyle Group and Goldman Sachs raised multibillion-dollar funds. The biggest fundraisers were US firms. Warburg Pincus raised $8 billion, Goldman Sachs Capital Partners amassed $8.5 billion in the world ‘s biggest fund. Carlyle raised more than $10 billion in two funds. In Europe, Kohlberg, Kravis, Roberts, raised more than €4 billion. CVC Capital Partners amassed €6 billion, a record for Europe.