Oakfield Capital Partners (OCP), a private equity firm specialising in investing in small and mid-sized British businesses (SMEs), is to launch a new GBP20m fund which will allow its investors to qualify for tax relief under the government-backed Enterprise Investment Scheme (EIS).
OCP’s UK Special Situations Fund will invest in six to eight SME businesses which need both finance and management support to realise their full potential.
The new businesses will join OCP’s existing stable of five companies in which it has invested since the firm was founded in 2008.
OCP partner David Pitman (pictured) says: “In the current financial environment even good quality SMEs have been finding it increasingly difficult to raise fresh capital. SMEs are a vital part of the British economy – they account for 60 per cent of employment and 50 per cent of turnover in the UK’s private sector – and we believe that successful SMEs will typically produce faster growth and better returns than larger companies.
“We invest in SMEs whose potential has not been realised, perhaps because they have non-strategic owners or the wrong capital structure. These businesses are like diamonds in the rough – their intrinsic value is high but many of them need to be reshaped and polished to realise that value. The SME sector often lacks access to the right type of capital and expertise but offers significant opportunities for a focused private equity firm.”
To date OCP has raised GBP23m to invest in its five investee companies. By adding management expertise as well as money the performance of those businesses has improved rapidly – as has the numbers of staff they employ.
“We believe that we are unique within the EIS funds market in that we invest meaningful amounts of our own personal capital alongside our investors and become directly involved in the management of the businesses in which we invest,” Pitman says. “We are not simply financial engineers. Between us, the Oakfield partners have over half a century of commercial management experience, and by taking a hands-on approach to our investments we believe we can produce superior returns compared to funds which simply write a cheque and sit back and watch.”
OCP hopes to complete its Special Situations fundraising by the autumn. The minimum subscription is GBP50,000.
