By Mathieu Robbins
LONDON (Reuters) - Large-scale mergers among buyout firms are unlikely to win the support of key investors like pension funds because of the uncertain impact on current management teams, a senior executive with buyout firm Apax Partners Ltd said on Tuesday.
The comments come amid talk of possible consolidation in the private equity sector as the scarcity of lucrative deals increases the pressure on the funds to chase bigger targets.
"If you just merge two management teams they (investors) wouldn't necessarily give you twice as much money," said Adrian Beecroft, chief investment officer at Apax at the Reuters Hedge Funds and Private Equity Summit in London.
"If you have a group that has a 20-year track record of making money, the people know each other very well ... and the machine works," he said.
"If you put in a different (team)... investors are nervous and I think correctly, that it may not work."
Apax, founded about 30 years ago, is one of the few private equity firms that has bought a rival. It boosted its U.S. presence last year by merging its U.S. arm with Saunders Karp & Megrue, a mid-sized firm focused largely on U.S. consumer and retail investments.
One factor that may help private equity firms go it alone on big deals is the large amount of money available, said Beecroft. Apax in July closed its latest fund after raising 4.3 billion euros, in excess of its target of 4 billion.
"Where everyone is going is raising bigger and bigger funds themselves, leading to a point to where funds are big enough that people can do deals alone," he said.
London-based Apax, which has offices in Hong Kong and Israel as well as Western Europe and North America, has about $20 billion in funds under management worldwide and is among the largest private equity firms.
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