Penta Capital, a late stage investor established by ex-Royal Bank Development Capital executives, has announced the final close of its first fund. Launched at the end of 1999 by an experienced investment team new to fund raising, Penta Fund I now has commitments of over GBP130 million.
The fund will be invested over the next two-and-a-half to three years, targeting mid-market companies valued at GBP5 million to GBP75 million and based in the UK and Ireland. Operating from Glasgow, the firm’s preferred industry areas are leisure, business-to-business services, and IT and communications sectors.
The cornerstone investor, which committed to the team’s independent venture in December 1999, is the Bank of Scotland. Both Torquil MacNaughton and Steven Scott of Penta were previously with the bank’s structured finance team and the bank also worked with the team providing debt on deals during its RBDC days.
The GBP50 million put forward by the Bank of Scotland was matched by the Old Mutual and the fund’s first close of GBP100 million, exceeding its GBP75 million target, was announced in May last year.
The final close includes two GBP15 million contributions from relative new comers to private equity, the former building society, Northern Rock and the Dutch-Belgian banking and insurance group, Fortis. Penta originally approached Fortis as a potential cornerstone investor.
This investment, the group’s first in a UK private equity fund, coincides with the planned expansion of Fortis’ other private equity activities. By building mutually beneficial, long-term relationships with a small group of substantial investors, which Penta aims to expand for the next fundraising, the firm hopes to retain some of the benefits of captive funding, without making any of the sacrifices.
Drawing inspiration from many US VCs the firm began developing a small Network Fund in January to invest alongside the first Penta Fund. The select anonymous group of entrepreneurs and businessmen from Penta’s target sectors does not have a huge amount of capital to invest. It is the group’s contacts, experiences and industry knowledge that Penta anticipates will improve the quality of its deal flow and add value to its investments.
The firm has made four investments to date, totaling over GBP21 million. These include the MBO of McLaren Consulting and investments in Transrent and the Datacare Software Group.