Duty Free Shopping founder sells Squadron to FLAG Capital: sources

HONG KONG Mon Oct 22, 2012 9:35am EDT

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HONG KONG (Reuters) - U.S. private equity investor FLAG Capital is to buy Squadron Capital Advisors, a private investment firm controlled by the founder of Duty Free Shopping outlets Robert W. Miller, sources with knowledge of the matter told Reuters.

The deal, set to be the first acquisition of a fund of funds in Asia's private equity industry, was expected to involve Squadron's team of around 23 people, including chief executive David Pierce, staying on board, one source said.

Pierce will become a partner.

Fund of funds pool capital to invest in selected private equity and hedge funds on behalf of other investors. The value of the deal was not known, but one source said on Monday an official announcement detailing the transaction was imminent.

Miller put Squadron Capital, one of Asia's best known fund of funds, up for sale after of a strategic review, sources said.

FLAG Capital's Asia-based principal Tina Wei is expected to have a senior role at Squadron after the acquisition is complete, one of the sources said.

The acquisition would give the U.S. firm, established in 1994 and with over $4.5 billion in client commitments, a presence in Asia through an established platform.

Wei did not comment immediately. FLAG Capital and Squadron declined comment.

The sources could not be named as the deal was not public.

Squadron is a unit of Miller's Search Investment Group, which he founded in the early 1970s, according to information on the Search website.

Squadron Capital manages the group's private equity and direct investment portfolios and has around $1 billion in assets under management, the sources said.

Squadron manages funds and investment programs for investors across the Asia region, and in 2011 established a $150 million program with Finnish government pensions institution Keva to invest in private equity funds in China, India and Southeast Asia.

Duty Free Shopping, which Miller co-founded, is now co-owned by luxury retailer and investor LVMH Moet Hennessy Louis Vuitton SA (LVMH.PA) of France.

The Search Investment Group is also a shareholder in Ortelius Capital Partners, an investment firm with offices in New York and London that was founded in 2002 by Miller's son-in-law, HRH Prince Pavlos of Greece.

(Editing by Denny Thomas and David Holmes)

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