Close Brothers Private Equity has announced an initial closing of Close Brothers Private Equity Fund VI at GBP130 million and has another GBP20 million awaiting confirmation. The fund hopes to raise a total of GBP200 million by September.
The company started raising this fund, its first to include commitments from U.S. investors, at the end of last year. John Snook, a managing director, said, “It’s our first time raising in the U.S., and we’re still feeling our way.”
Berchwood Partners of New York has acted as placement agent and adviser to the fund’s U.S. effort, while JP Morgan Chase has the same role in the U.K.
Fund VI has succeeded in winning the support of three U.S. investors so far, with potentially another three still to come on board. Snook anticipates building on this American investor base when raising the firm’s next fund.
This fund will continue the investment strategy of the last fund, which raised GBP110 million in 1997. The fund will invest GBP2 million to GBP20 million in transactions of GBP5 million to GBP50 million.
Close Brothers invests in U.K. buy-and-builds, institutional buyouts and commits development capital. Target sectors are business and IT support services, transport and logistics, industrial manufactured products, leisure and tourism.
Of the investors, 80% have previously made commitments to other Close Brothers’ funds. Investors in this fund include Access Capital Partners, Bank of Scotland, Caledonia, Clerical Medical, Close Brothers Group, Halifax and Lancashire County Council.
“We’re pleased to have gotten where we are with the fund raising it’s getting harder,” Snook said.
Snook said he thinks the market for mid-range buyouts is relatively buoyant and anticipates GBP100 million of the new fund will already have been invested by the final close. Accordingly, he expects Close Brothers to start raising its next fund in 2002.
The firm recruited two London-based investment managers, Mark Perryman and John Fisher, in February this year to help with the extra workload that Fund VI will bring. Another team member will be added in the near future to assist with future fund raising, giving the firm a total of 13 investment professionals.
The fund has already made six investments totaling GBP60 million. These include the management buyouts/ buy-ins of Hillarys Blinds and Park Resorts (deal value GBP46 million) both announced in May. Of the six portfolio companies, four involve serial entrepreneurs previously backed by Close Brothers.