PE fund briefs, week of Aug. 17, 2009

Graphite Capital seeks annex fund

British private equity firm Graphite Capital has approached investors to add to its existing buyout fund as it targets bigger deals relying on more equity and less borrowing, according to sources familiar with the situation.

Graphite, which has backed noodle bar chain Wagamama and electronics retailer Maplin, raised $912 million for its seventh buyout fund at the height of the buyout boom in 2007, limiting the number of investors and capping their commitments to retain its mid-market deal focus.

But in a sign of how private equity firms are having to cut their cloth to current market conditions, Graphite has gone back to investors with cap in hand to ask for about an additional $58 million to help it do deals at the top-end of its enterprise value range, sources say.

“Their rationale is that at this point in the cycle they would prefer to be doing deals at the upper end of their enterprise value range, rather than smaller deals which they perceive as being riskier,” says one of the sources.

Graphite declined to comment.

Graphite’s seventh fund included a separate co-investment fund of about $130 million to put into larger deals. The new pool of capital will allow the firm to pursue larger deals without putting more than 8% of the fund into any single investment, the sources say.

Graphite’s fund is only about 20% invested in companies, including luxury shoe retailer Kurt Geiger, which was bought from Barclays Private Equity in 2008 for about $155 million.

Graphite will only charge management fees on cash drawn from the top-up fund, says one source. —Simon Meads, Reuters

Deloitte cans fund placement team

Deloitte is in the process of shutting down its Fund Placement Advisory Group. The London-based effort employed 10 professionals, and it focused on helping to secure fund capital for mid-market buyout firms in Europe.

A Deloitte spokesperson in London responded in an email: “Due to an increasingly complex regulatory environment in this area, we have decided that it is no longer practical for Deloitte to maintain a Private Equity Fund Placement Service in the UK. We are working hard to ensure that there is no inconvenience to clients. This was a niche service offering, and we remain fully committed to the PE sector.”

Some of its key members have already found new employment. Group head James Coleman has joined Probitas Partners, where he will lead the U.S.-based firm’s European efforts from London. Director Vincent le Hodey also will join Probitas, with a focus on European relationship management and secondary fund advisory. The pair will bring at least two of their Deloitte mandates with htem over to Probitas, although both are said to be near completion. —Dan Primack