Merger creates Europe’s biggest secondary investment house

DFJ Esprit and Tempo Capital to unite


Two venture capital houses, DFJ Esprit and Tempo Capital, have announced plans to merge their secondary investment arms – in a deal that will create the biggest venture secondary company in Europe.

The new company, to be called DFJ Esprit Secondaries, will have a total of 60 companies under management – in a pot that is worth more than $1.1bn (£700m).

It will focus on technology businesses in the European venture market, as well as providing liquidity to founders, VC houses, business angels and other shareholders. The combined group will be managed by David Tate and Olav Ostin, both managing partners at Tempo Capital.

 

The secondary market, a growing part of the investment environment, gives companies the opportunity to buy existing venture capital investments – whether they are single companies or entire funds.

David Tate, managing partner of DFJ Esprit Secondaries, said: “The primary and direct secondary investment markets are converging, with the result that scale and breadth of experience will become increasingly important in the direct secondaries market.”

He added: “In DFJ Esprit, we have found like-minded partners, who have a positive attitude to the secondary market, having successfully closed a number of such deals in the past.”

Before the merger, DFJ Esprit’s secondary investment business, Encore Ventures, sealed some of the biggest secondary deals in history. These included the £170m acquisition of 3i’s venture portfolio, the £55m take-private of Prelude’s venture portfolio, and the acquisition of Cazenove’s £234m venture capital fund.

Meanwhile, the Tempo team will bring experience of very complicated secondary venture deals – particularly those which require the valuation of several businesses within a single portfolio.

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