Inflexion, the London-based fund manager that owns stakes in clothing designer Jack Wills and travel agent On the Beach, has amassed more than £1bn, the largest amount raised for UK private equity deals.
The investment group, which targets small to medium sized companies, has simultaneously raised £650m for leveraged buyouts and £400m to buy minority stakes in UK businesses, double the amount it raised for a single pool in 2010.
Both funds were oversubscribed within five months in part thanks to “overwhelming support“ from existing investors, highlighting how the private equity groups that have weathered the financial crisis are attracting a greater share of investors’ cash, while those that have had losses struggle to raise any money.
“We just had a brilliant last 24 months during which we’ve done lots of new investments and some fabulous exits,” Simon Turner, managing partner at Inflexion, told the Financial Times.
Fundraising volumes have picked up in the past year as fund managers were able to accelerate the pace of asset sales and distributions to their investors. Inflexion returned more than 16 times its initial investment in FDM in four years when it sold its shares in the IT company through a London listing in June. The group’s fund raised in 2006 is marked at more than twice its cost and the 2010 pool is profitable, Mr Turner said.
The new minority stakes fund will be headed by David Whileman, who defected a year ago from 3i Group, where he was head of the UK.
This new pool will “provide solutions to entrepreneurs who don’t want to take on debt and don’t want to sell control but who do want the benefits of an institutional investor being involved,” Mr Turner explained.
The total amount raised by Inflexion’s two funds tops Exponent Private Equity Partners’ £805m pool collected in 2008, and follows ECI’s closing of a £500m fund dedicated to UK deals last month. Last year, Graphite Capital garnered £475m.
The successful fundraisers contrast with the fate of Gresham, one of the oldest names in British private equity, which in June, decided to abandon plans to raise another fund and focus on selling its portfolio instead.
There were 193 UK buyouts completed in the first half of this year, according to data compiled by the Centre for Management Buyout Research. This compares with 365 for the whole of 2013, the lowest number of deals since 1985, and a peak of 718 buyouts in 2003.