UK-focused Advantage Capital, a new buyout house, has announced the first close of its debut fund, Advantage Capital Partners 1. The new fund has raised GBP10 million so far and hopes to close the fund in the second quarter of this year at GBP40 million.
Lloyds TSB Development Capital is the cornerstone investor committing 25 per cent of the fund and is also keen to co-invest, providing Advantage Capital with access to larger amounts of equity should the need arise. There are already over 20 investors in the new fund including a combination of institutional investors and high net worth individuals.
Founded by Trevor Jones and Martin Bodenham, Advantage Capital is targeting UK MBOs with a value of between GBP5 million and GBP30 million. Jones was previously chief executive at Gresham Trust and Martin Bodenham was a corporate finance partner at both KPMG and Ernst & Young.
Bodenham says the firm’s strategy is to focus only on difficult deals of real merit. “These are buyouts of genuinely good businesses with talented management teams but which are difficult transactions to finance.” He added that there are many reasons for this difficulty, ranging from companies operating in an unloved sector to newly configured business units where there is a lack of verifiable historic results. “Advantage will therefore adopt a non-herd approach to investing and will consider each deal on its underlying merits. Management will always be key,” he said.
The fund is already looking at new investments and will remain open to new investors until summer 2002. Jones said: “During this toughening economic environment a number of private equity houses are retrenching. Others are worried about problems within their portfolios as recession clouds loom. Advantage Capital, on the other hand, believes that now is exactly the right time to making new investments.”