May 2011 – GCP raises £160 million fund to invest in UK SMEs
GCP raises £160 million fund to invest in UK SMEs
Growth Capital Partners LLP (‘GCP’) is pleased to announce the closure of its third Fund, which was over-subscribed, at a level of £160m. Originally targeting £150m at its launch in January 2010, GCP III has attracted a strong global institutional following and is comprised of over a dozen investors participating as limited partners including European Investment Fund, Golding Capital Partners and Lexington Partners. GCP’s underwriting capacity is also significantly extended by a number of the Fund’s investors participating in the firm’s co-invest program.
GCP’s innovative and proven approach to funding UK based small and medium sized enterprises (‘SMEs’) has been a strong pull both for investors to the Fund and for the management teams which it backs. This is because typically, GCP provides all or the majority of the funding in any transaction through an optimal structure for both the Fund’s investors and investee management teams. This approach avoids the level of risk that is incumbent in higher debt structures with GCP’s investment returns being driven by active value creation through, for example, buy and build, expansion into international markets and operational improvement.
According to Bill Crossan, managing partner of GCP:
“Our funding structure enables the SMEs we back to grow substantially as our management teams are highly incentivised through an ability to retain more equity than the traditional private equity model. Inaddition the advisors we work with know that because we do not rely on external bank debt there is real certainty of delivery.”
Recent examples include Tangerine, the UK’s leading independent confectionery manufacturer which makes Butterkist popcorn; WrapFilm Systems, the owner of Baco Foil; Amor Group, a leading technology business focused on the Oil & Gas, Transport, and Public sectors; and Entec, a leading environmental consultancy. Most recently the firm sold its 40% stake in A-Gas International, which under GCP’s backing had been transformed into a global business, in a deal that valued the company at £70 million, generating a 2.3x return.
GCP has a broad sector focus and over the last 10 years has invested in businesses throughout the UK. GCP’s distinctive approach of investing across the capital structure and working closely with ambitious entrepreneurs has been a winning formula for the firm’s previous two Funds.
Bill Crossan comments:
“We’re excited by the opportunity of deploying our fund through the provision of flexible, patient capital in a market that is the engine house of the UK and where there is significant value.”
Bill Crossan continues:
“Our new fund, the strength of our team plus our recent successful exits from Allen & Heath, Entec and A-Gas send a clear message to advisors and SMEs that we are in business to do deals.”
GCP’s Fund II has a realised track record of 2.4x and 30% IRR following three successful exits, which have returned more than the total investments made by the Fund. There are six remaining investments in the portfolio and GCP expects to deliver further value to its investors as it realises these assets in due course.