Boutique private equity management firm Carnegie, Wylie & Company has celebrated its second year in business with the launch of a new private equity fund and diversification into corporate advice.
Last week, its principals began selling interests in the CWC Fund II to global and local institutional investors, seeking to raise around $US100 million ($196 million). CWC Fund II will target private equity investments in Australia and Asia, with about two-thirds of the funds raised earmarked for Australia.
The fund follows the $US70 million CWC Fund I, which was launched early last year. CWC Fund I, which attracted investment from the Government of Singapore Investment Fund and Hellman & Friedman partners, owns a one-third stake in Indonesia's second-ranking commercial TV network.
The new fund will intensify competition for funds and investment opportunities in the Australian private equity market. With an estimated $2 billion in private equity funds now under management, compared with nothing five years ago, investment banks and brokers such as Gresham Partners, Grant Samuel, Macquarie Bank and JB Were are all vying for institutional mandates.
The major appeal of private equity funds to institutional investors is the promise of higher returns. Typically, private equity funds aim to deliver 30 per cent-plus returns, compared with 12 to 13 per cent returns historically earned from listed equities.
According to the firm's sales pitch to institutions, the new fund will target private companies in growing markets and with high returns on investment capital.
The new fund coincides with Carnegie, Wylie's official launch into corporate advisory work.
The firm had avoided engaging in advisory work until now because one of its principals, Mr John Wylie, was non-executive chairman of Credit Suisse First Boston Australia, a major M&A advisory house.
However, Mr Wylie relinquished his directorship at CSFB recently and will no longer be engaged in CSFB's advisory work.