Graphite raises fund for larger deals

Graphite Capital, the UK mid-market private equity firm, has raised its seventh fund, Graphite Capital Partners VII, with total commitments of £475m. In addition, it raised a co-investment fund of £80m for the purpose of investing alongside CP VII in selected larger transactions.

The new fund represents a relatively small increase on the last fund, Graphite Partners VI, which closed on £375m, considering the current environment for fundraising.

According to Rod Richards, managing partner, putting quite a stringent hard cap on the original fund and raising a separate side-car is part of a pre-determined strategy by the private equity house to keep faithful to its mid-market roots while having the optional fire power to do larger deals as well.

Richards says: “We could have raised more but we still want the £30m deals to be important to us. But we also wanted the ability to do larger deals in the £150m–£200m range without having to bring in a pool of co-investors. It gives us flexibility without tying us in too much.”

He says that although it sits alongside GCP VII, the co-investment fund is not charging any upfront management fees.

“Fees will get charged once an investment has been made, it is not a time critical fund,” he says. “Money will be drawn down as and when a decent opportunity comes along. We didn’t market it actively; we just asked our original investors and every single investor in this fund is also invested in GCP VII.”

The new fund has 39 investors, with the largest commitments coming from the UK (39%), Continental Europe (36%) and the US/Japan (25%). They were attracted by the firm’s consistently strong track record over a prolonged period. Graphite recently celebrated its 25th anniversary.

Including Graphite Enterprise, the quoted investment trust also managed by the firm, Graphite now has funds under management of more than £1.2bn.

During the last 18 months, Graphite has made eight new investments including the £130m acquisition of Cinque Ports Leisure, the £86m secondary management buyout of NES Group and the £85m management buy-in/buyout of Micheldever Tyre Services.

Helix Associates acted as placement agent for the fund and SJ Berwin acted as legal adviser.

Sandrine Bradley