UK-focused primary buyout specialist Kester Capital has closed its latest fund, Kester Capital II, at its hard cap of GBP90 million within a nine month fundraising period.
Kester Capital was advised on the fundraising, which was oversubscribed, by placement agent Elm Capital and Travers Smith, who provided legal advice. Investors in the fund include both new and existing UK, continental European and US institutional investors.
Kester’s second fund will invest in UK SMEs requiring institutional capital for the first time, with a focus on healthcare, business & financial services and TMT, as these sectors experience high growth at the moment, as well as opportunities for technological improvement and market consolidation.
Kester Capital completed the MBOs of YouGarden and Vixio (formerly ComplianceOnline), during the fundraising period. Last month, the buyout firm refinanced online garden centre YouGarden, nine months after the initial investment, returning over 60 percent of capital to its investors.
Kester has also completed the recent sale of Frontier Medical’s Infection Prevention division to Vernacare, which is backed by HIG Capital.
Adam Maidment, managing partner of Kester Capital, said that the investors were able to conduct much of their due diligence work remotely over the last three months. “Although market conditions have been challenging in the wake of the Covid-19 pandemic, our portfolio has continued to perform strongly,” he added.
“Having closed the new fund, we are now actively looking for new investment opportunities as well as expanding our investment team,” said Cameron Crockett, managing partner of Kester Capital.
“We see significant potential in the UK lower mid-market where fundamentally attractive businesses can achieve a level of growth that bucks the wider market trend, and in turn require an investment partner like us to fulfil their ambitions,” he continued.
Founded in 2007, Kester’s portfolio includes pet retailer Jollyes, Avania, Frontiermedical Group and Travel Entertainment Group.