Private Equity

An experienced private equity manager with a track record delivered through a differentiated investment strategy.

The Private Equity business within BMO Global Asset Management, was established in June 2005 when the business was acquired from Martin Currie Investment Management. With over £1bn assets under management, the Private Equity business is a highly experienced specialist private equity manager with a proven ability to identify and access strong performing mid-market and prime managers. Our team manages a number of products at different stages of maturity and with different mandates but with certain common themes, such as a mid-market focus, primarily in buyout funds with the ability to pursue selective co-investments and secondary investments.

Our investors benefit from our track record, specialist industry knowledge, market research, fund access, disciplined investment approach and focus on long-term positive investor relations.

In addition, we aim to reduce our fund investors’ risks through the fund structures that we manage for them. Furthermore, our investors are relieved of the costly and time consuming exercise of directly monitoring investments and fulfilling reporting requirements which we perform on a transparent basis on their behalf. We cater to a variety of investor types from a number of different countries with specific investment needs, including government pension funds, institutional pension funds, insurance companies, endowments, private banks, family offices and individuals.

As well as managing our investment funds we offer bespoke services related to private equity portfolios. This may take the form of the assessment, restructuring or management of existing private equity portfolios or the implementation of customised private equity investment programmes based on specific client requirements, leveraging the experience and operations of our Private Equity team (‘the Team’).

Past performance should not be seen as an indication of future performance. Capital is at risk and investors may not get back the original amount invested.

The Team

A core team, benefiting from the support of the wider BMO Global Asset Management operation, focused on delivering a positive investment experience to investors.

BMO Global Asset Management has over one thousand Full Time Employees (‘FTEs’). Our Private Equity team (‘the Team’) consists of eleven FTEs, including six investment managers, two investment analysts, one investor relations and business development professional, one office manager and one secretary. Hamish Mair, Managing Director and Head of Private Equity, leads the Team. The core Team, all of whom actively contribute to the investment decision making forums, is shown below and has more than 140 years aggregate investment experience.

Other colleagues within BMO Global Asset Management perform administrative accounting, legal, compliance, marketing and sales functions on behalf of the Private Equity business. This allocation of responsibilities permits the core Team to focus all its attention on proactive fund investment and management as well as investor relations, in an effort to continue to deliver returns and a high quality service for investors. The core Team’s skill sets encompass private equity investing, accountancy, corporate finance and the management of quoted portfolios. Our private equity activities date back to the early 1980s.

Hamish Mair
Managing Director, Head of Private Equity
Hamish has 30 years of investment experience of which 26 years are in private equity. He has been head of the private equity team since inception and is lead manager of the BMO Private Equity Trust plc.
Stuart Hastie
Director, Private Equity
Stuart has 22 years investment / lending experience, including 11 years in private equity. He joined the team in 2011 and is responsible for business development and investor relations.
Richard Nairn
Director, Private Equity
Richard has 17 years of investment company experience, including 12 years in private equity. He joined the private equity team in 2006.
Neil Sneddon
Director, Private Equity
Neil has 21 years of experience investing in private equity funds. He joined the private equity team in 1997. Neil is also the deputy manager of BMO Private Equity Trust plc.
Sanjana Tiwari
Director, Private Equity
Sanjana has 18 years of investment / business development experience, including 11 years in private equity. She joined the Team in 2011. Sanjana's first involvement with alternative investments was with Citi in London from 2007 to 2011, covering private equity advisory and commodities investments.
Iain Munro
Director, Private Equity
Iain has more than 20 years of experience delivering financial advice and solutions to Canadian and US middle-market private equity funds and companies as an investor, lender and investment banker.
Andrew Carnwath
Director, Private Equity
Andrew has 10 years of investment experience in private equity. He is a former member of the private equity team (2008-2013) and re-joined the team in 2018. From 2013 to 2018 Andrew was a Principal at Scottish Equity Partners LLP, a UK based private equity firm, where his responsibilities included the co-management of an energy focussed secondary fund. He is a chartered accountant and CFA Charterholder. Andrew is a graduate of Edinburgh University.
Adam Boyd
Senior Associate
Adam has three years of investment experience. He joined the private equity team in 2018. Adam started his career at 3i Group plc, the listed global mid-market private equity investor, working as an Associate in their UK PE team where he was involved in origination, deal execution and portfolio management of UK assets. In addition, he also had experience in 3i’s European infrastructure investment and debt investing teams. Adam is a graduate of the University of St Andrews.
Jonathan Brown
Associate
Jonathan has two years of investment experience. He joined the private equity team in 2018. Jonathan started at BMO Global Asset Management on the Investment Graduate Programme. From 2016 to 2018 he worked in the Systematic Equity, Multi-Strategy, Global Rates and Liability Driven Investment teams. Jonathan holds the Investment Management Certificate and is studying for the CFA. Jonathan is a graduate of the University of Birmingham and spent a year studying at the University of Illinois at Urbana-Champaign in the USA.

Investment Process

A private equity manager with a clear and concise investment approach.

In a lower interest rate environment and with lower returns from listed assets, private equity investments have the potential to reward investors with higher returns. Private equity can, however, carry higher risk than listed investments. This can be due to individual characteristics of private companies as well as the absence of a liquid market for these companies.

Our investment approach helps mitigate these risks through diversification. We recognise that investors want to access higher returns offered by the asset class, without sacrificing a significant portion of their risk budget.

Our solution is to assemble a distinct portfolio of carefully selected private equity investments, accessible to investors through an appropriate vehicle. Such a portfolio can contain numerous funds and/or co-investments, with many private companies as part of its underlying investments, thereby delivering a suitable level of diversification in order to reduce risk.

Our selection process emphasises multi-layer diversification to various portfolio features such as geography, fund manager, vintage year, industry sector, company size and type of deal (buyouts, development capital or venture).

Our established operation provides investors with access to private equity funds, where the single investor’s commitment may be too small for a specific fund to consider, or where the fund is closed to new investors due to outstanding interest as a result of past success.

We are likely to already have contact with such funds which makes access possible. At times, while a new investor may not have knowledge of specialist funds in a target market, we do this through our pro-active market screening.

Our active and established presence in the primary market also permits us the opportunity to take advantage of, after careful consideration, co-investments and secondaries opportunities thereby allowing us to further enhance returns for our investors.

Our Private Equity team (‘the Team’) implements a structured investment process. As part of this we continuously monitor the breadth of the market and have in-depth knowledge of private equity managers through our long-term involvement.

Our structured investment process allows us to target private equity investments that are well equipped to potentially deliver strong performance. The principal means of risk control we employ is through careful and measured portfolio construction. Each portfolio is constructed to achieve appropriate diversification. The precise allocation to individual funds and/or co-investments reflects our view on relative attractions of key geographies, fund managers, vintage years, industry sectors, company sizes and types of deals. The key steps of our primary fund investment process are outlined below. (NB: the investment process for secondary fund investments and co-investments are similar but different).

We originate dealflow through an active presence in the private equity market where we have been making investments for over a quarter of a century.  As a consequence, our Private Equity business is exposed to substantially all the relevant lead managers in its chosen area of focus. A considerable proportion of the dealflow comes to us directly from managers. We keep the introducers and other intermediaries informed of our investment preferences. We also conduct regular searches of the trade literature and websites to ensure that opportunities are not missed. We pro-actively introduce ourselves to new private equity groups and maintain regular contact with longstanding groups. We routinely visit private equity groups forging links, often long before they are in fundraising mode. Unlike many, we have a willingness to take an educated risk on experienced but new private equity groups, so called prime (aka emerging) managers. We have no blanket prohibition on first time funds. We continue to select these as we have done successfully in the past. The Team has a background in direct investment in both private and public companies. This allows us to understand in detail the investment case for the underlying investment and helps us establish strong relationships with lead managers.

  • Preliminary assessment: The Team will determine whether an investment opportunity is sufficiently attractive to justify a first meeting. We focus on the remit of the fund, the track record and the provenance and experience of the management team. We also take into account issues such as the ownership of the management company. The majority of potential funds fall out at this stage. Our screening process incorporates a clear list of requisites for prospective funds and an equally precise list of the characteristics of the funds to avoid.
  • First meetings: The first meetings are conducted either in our Edinburgh, London or Toronto offices or at the offices of the private equity manager. After the first meeting the Team will have identified the key issues that underpin or undermine the investment case for the fund.  It is usual that these require considerable further examination. The detailed documentation supporting the investment case is considered and initial referencing is conducted. 
  • Second and further meetings: Subject to the fund passing scrutiny on the above basis, a second meeting will be arranged. This is usually held at the manager’s own office and will last for most of a day. The objective of these meetings is to gain a deeper understanding of all aspects of the investment proposition, and allow us to meet substantially all members of the team. In these meetings we will aim to understand where the manager adds value in sourcing and executing investments. It is usual for fund investments to require a third or fourth meeting. This will also include, where possible, a meeting or discussion with investee companies.

Once the due diligence meetings have been completed an investment proposal paper is prepared. This will contain all the key elements of the investment case. It also contains an analysis of the strengths and weaknesses of the proposition. The paper contains a balance between quantitative and qualitative material. The features of the investment proposal are not scored or rated numerically. This is principally because different issues or factors have different weights in the decision making process for different funds. The investment paper is then discussed by the core Team in an extended meeting with the sponsoring executive leading the discussion. The decision to proceed, or not, is taken following these discussions by the Head of the Team.

During this phase of the process, we focus heavily on legal due diligence. Once the investment proposal has been written and approved, a more detailed examination of the legal documentation is conducted. Throughout this process we ensure that fund terms adhere to industry best practice. Where we are a significant investor we also aim to negotiate preferential terms. The Team often acquires memberships on advisory panels or supervisory boards of underling funds. This enables us to more effectively represent our clients’ interests, and to act constructively should the fund encounter unusual circumstances. It also allows for better understanding of the management and operations of the underlying funds.

The number of primary fund commitments is determined by the targeted spread of the portfolio and, in particular, the number of underlying companies required to cover the breadth of the target market. The target portfolio must also adequately diversify manager risk as well as geographic, vintage, sector, company size and deal type risks. Adequate diversification of manager risk is problematic with below 10 fund commitments. In order to track the contribution of each fund to the performance and to keep a balanced underlying portfolio in terms of individual stock risk, the size of fund positions we take have a limited size range. We also believe that it is important not to negate the diversification benefits of multiple funds from the same manager but without over-concentrating in any particular management group. Where a manager has a proven strong track record, our position may be somewhat larger than the norm, where the manager is less proven, somewhat smaller.

We monitor our investments through the receipt of regular reports, having regular meetings and through regular phone calls along with the associated analysis and valuation of the fund portfolios. Each executive in the Team has identified responsibility for specific investments and the Head of the Team has additional overview responsibility. The portfolio is comprehensively reviewed every quarter and we provide quarterly updates to our investors. Ongoing monitoring of the fund investments the Team makes includes engaging with the managers of the funds on their management of Environmental, Social and Governance (‘ESG’) issues. As a founder signatory to the United Nations-backed Principles for Responsible Investment (‘UNPRI’), we are committed to integrating the analysis of ESG issues across all asset classes. In the private equity asset class many managers are at an early stage in terms of explicitly incorporating the management of ESG into their process. The Team, supported by our colleagues in our Responsible Investment team , work to encourage progress in this area.

Investment Strategy

Our differentiated investment strategy has helped us deliver a track record for the benefit of our investors.

Our Private Equity team (‘the Team’) currently manages a number of private equity products and programmes on behalf of a number of investors. The Team applies a differentiated investment strategy, incorporating the following key elements:

Although we do not manage sector specific funds, we do invest in specific investment themes where we believe growth is underpinned by sustained and significant factors. By way of example, one such theme is climate change. The corporate sector, which is already assessing the risks of climate change to its business models, is starting to rise to the challenge of finding solutions. As an investment theme climate change is universal in relevance, unprecedented in scale and sustained in longevity. The challenge of climate change is matched by an opportunity for the evolution of products, services and markets linked to mitigation and adaptation. Our focus is primarily on deals and funds that would meet our normal criteria with the additional overlay of the climate change theme. We are not departing from our primary expertise, which is in making private equity investments, rather we are combining this expertise with that of our in-house Responsible Investment team to harness their more than three decade expertise in climate change policy and regulation – this allows us to sensibly seek to capitalise on the present climate change themed investment opportunity for our investors.

The Team has been investing in the European and North American private equity markets since the 1980’s and has also built some exposure to Emerging Markets. The Team screens a global dealflow, seeking out investment opportunities where the deeper knowledge of local managers allows for potentially enhanced returns. In all the products that the Team manages, careful consideration is given to ensure the geographic remit matches the proposed underlying strategy.

The Team focuses on investing in private equity funds and selective co-investments in the mid-market. The core of this market is represented by companies with an enterprise value up to €500m. There are thousands of good quality private companies in this size bracket, which are increasingly receptive to private equity.

In this tier of the market, competition is less intensive and experienced private equity investors are able to invest at prices which are highly attractive by international standards and where the prospects for earnings growth are excellent.

Mid-market companies often have a demand for finance to grow. They are also small enough to grow quickly but large enough to secure profitable exits, either by way of trade sale or by sale to larger private equity groups. Private equity investors have the opportunity to invest in real growth areas and create the right conditions within corporate structures for growth. In addition, frequently there are ownership and managerial succession issues which provide investment opportunities. Private equity investors are increasingly flexible in structuring deals to accommodate the goals of owner managers. Furthermore, in the mid-market local knowledge and local business and banking networks are key to success. Therefore locally based private equity investors have a material advantage in sourcing and executing deals. The Team actively researches and forges relationships with local management firms.

The Team deliberately includes a significant component of prime managers within its portfolios. We define prime managers as experienced and motivated private equity investors raising either Fund I, II or III (irrespective on nomenclature). These private equity groups have considerable experience within their teams but are not yet brand names. Our Private Equity business has a track record of successfully identifying private equity fund management groups at a formative stage in their development. The strong alignment of interests between manager and investor has led to excellent returns. The Team has backed various prime managers over the years and as private equity markets continue to develop, new management groups appear. These management groups typically have the following characteristics: 

  • Experienced with track records: Prime management teams come together for a number of reasons – they may come together from other firms or are looking to raise their first external fund having previously been captive managers. We look for teams comprised of experienced individuals who have strong attributable track records from their previous private equity roles.
  • Focused on the mid-market: These teams are often setting up for the first time under their own banner having established a strong network of contacts at a local level in the mid-market.
  • Motivated to succeed and closely aligned with investors: We look for teams that are motivated to succeed both from a reputation and financial standpoint, with the reward spread fairly across the team. We believe it is important for managers to be incentivised to generate good absolute returns, thereby aligning the interests of the manager with the investor.
  • Smaller, more cohesive teams: These teams usually possess complementary skill sets and work closely with each other. We believe that prime managers play a much larger part in the success of their own firms and are therefore typically more strongly motivated to work together as a team for the greater good of the whole. 
  • Appreciative of early backers: Prime managers are generally looking to expand their investor base and are grateful recipients of small and medium sized commitments, which, in our experience, provides a good source of attractive co-investment opportunities as well as continued access to later funds even if they are over-subscribed.

We invest selectively directly into companies alongside our underlying private equity managers, so called co-investments. This provides an opportunity to enhance returns. The Team cherry-pick from a broad dealflow of co-investments which are pre-selected and diligenced by groups that we have already carefully selected through our intense investment process. We are under no compulsion to participate in any such deals, and we only pursue co-investments where it is prudent from both an individual investment and a portfolio perspective. Co-investments are typically undertaken on improved terms concerning management fees and carried interest.

We participate in buying fund positions in the secondary market, usually at a substantial discount to Net Asset Value and with shorter hold times until realisation, which can lead to attractive returns. We see a substantial dealflow in secondaries and are able to cherry-pick the transactions that, through our financial modelling meet our stringent return hurdles. As an active primary fund investor we are often viewed as a knowledgeable and preferential replacement investor by the fund manager of the underlying fund in which the secondary position pertains. As the funds we manage could be an investor prospect in a new fund that the fund manager may be looking to fundraise for, this can give us a competitive advantage. We select these deals very carefully, and we only pursue secondaries where it is appropriate from both an individual investment and a portfolio perspective.

Contact Us

United Kingdom

BMO Global Asset Management
6th Flr, Quartermile 4, 7a Nightingale Way
Edinburgh
EH3 9EG
United Kingdom

Canada

BMO Global Asset Management
First Canadian Place
100 King St. W. 43rd Floor
Toronto
Ontario, Canada M5X 1A1