Dunedin Capital Partners has secured GBP45 million in the initial close of its buyout fund. This is the first fund to be raised in 10 years by the firm that manages the Dunedin Enterprise Investment Trust.
Dunedin started raising the fund last autumn and had originally anticipated a fund size of GBP35 million to GBP40 million at the time of the first closing. Having exceeded this figure the firm expects to close the fund at approximately GBP75 million by the end of the year.
The Edinburgh-based firm has doubled its team in the last 12 months to prepare for investments from the new fund. Investment manager Duncan MacCrae joined from Noble & Co., other new recruits include Graham Urquhart from Bank of Scotland, Nicol Fraser from Bridgepoint and Brian Scouler from Royal Bank Development Capital.
The fund’s first investment should be announced within the next four to six weeks. In total 15 to 25 investments of GBP3 million to GBP10 million in U.K. MBOs, MBIs and IBOs are expected over three years. Ross Marshall, managing director of Dunedin estimates only 10% of the fund’s investments will be made in Scotland, with London and the South East providing up to half of the deal flow.
The Dunedin Enterprise Investment Trust, which invested GBP32 million in seven deals last year, will co-invest alongside the Dunedin Buyout Fund. This will enable the company to tackle larger transactions of up to GBP25 million.
Investments will be made in established companies, preferably market leaders, with a good history of sales and profit growth. Marshall said Dunedin will not become sector specific. He added: “We will be following a buy-and-build strategy, looking for companies to grow through acquisitions.”
Cornerstone investors in the fund include Legal and General Assurance and Bank of Scotland, both of whom have a strong relationship with Dunedin, having backed the firm’s own MBO five years ago. Dunedin is seeking the support of more U.K. investors for the fund’s final round but will also look further afield in Europe.