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Graphite Capital raises GBP475m for UK mid-market fund

Mid-market private equity specialist Graphite Capital has closed its eighth fund, Graphite Capital Partners VIII, with commitments of GBP475m.

 
Further commitments are likely to come in over the next few weeks bringing the total to over GBP500m.
 
Existing investors provided over 85 per cent of the fund, many of whom increased the size of their investment substantially. The new fund has over 20 investors with 40 per cent of commitments coming from the UK, 25 per cent from continental Europe and 35 per cent from the US and Japan.
 
CPVIII is the largest fund investing solely in UK companies to be raised in the past five years. Graphite will maintain its mid-market focus, investing primarily in companies with high growth potential valued at between GBP40m and GBP150m. It will also invest in smaller companies with the potential to expand through the roll-out of new sites. The fund is likely to make eight to 12 investments across a wide range of investment sizes and industry sectors.
 
Graphite’s performance has been particularly strong during the economic downturn. Since 2006 it has invested over GBP600m in 20 companies and the performance of this portfolio has been consistently strong with minimal provisions. Ten of the 11 investments made in Graphite Capital Partners VII, its previous fund, are in companies capitalised at over GBP40m and all have increased both sales and EBITDA – many very substantially. All the companies have also increased staffing levels, adding 2,500 new jobs and growing total employment by 57 per cent to 7,000.
 
Graphite has completed a number of successful realisations in recent years, selling luxury shoe retailer Kurt Geiger in 2011 for GBP215m and completing a further four major sales in the last 12 months with a total value of GBP550m. These were NES Global Talent, the international technical recruitment group; Optimum Care and Willowbrook Healthcare, both premium quality care home providers; and Dominion Gas, the international oilfield services company. 
 
Graphite managing partner Rod Richards says: “We are delighted to have been able to raise a fund of our target size at this point in the cycle. We have been extremely pleased with the performance of the portfolio over the last few years and believe that we have developed an investment approach which generates high returns in a weak economic environment. As the UK market remains highly competitive and the number of quality opportunities is relatively limited, it is particularly important to be able to address the widest possible range of sectors and deal sizes. Through our long experience of the mid-market, we have developed a strong knowledge of many industry sectors and a broad network of contacts.  We are limiting the size of the fund to reflect activity levels in the market and have adopted a structure which gives us a high degree of flexibility on deal size.”
 
Weil, Gotshal & Manges acted as legal advisers. The team was led by Ed Gander, Jonathan Kandel and Stephen Fox.

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