Bowmark Capital Partners III’s last realisation, the exit of UK restaurant chain Las Iguanas, will result in a final return for that fund of 4x money and an internal rate of return of around 40 percent, Bowmark managing partner Charles Ind told Private Equity International.
Bowmark has agreed to sell the company for £85 million ($131 million; €120 million) generating a return of 3.7x, it is understood.
Eight of the 10 companies in the fund, a 2004-vintage, £105 million vehicle, generated returns of three to six times cost.
Ind described 2004-vintage funds, which invested through the financial crisis, as a “tough year”.
Fund III’s investments included specialised children’s travel operator Education & Adventure Travel, which was acquired in 2005 and realised in July 2008 for about £100 million; Jac Travel, that was acquired in 2007 and exited in 2014 at 4.6x money; Data Explorers, which provides financial information and was acquired in 2007 and exited in 2012 to Markit Group; risk management software company Datix that was acquired in 2008 and exited in 2012; Kisimul Group, which provides residential schooling to children with learning difficulties; and healthcare companies The Regard Partnership and Advanced Child Care.
“Our healthcare investments were some of the biggest drivers of the return,” Ind noted.
The mid-market firm’s fourth fund, a 2008-vintage, £265 million vehicle is fully invested.
“The fund invested the majority of its capital in the latter half of its life. There were not many deals in 2008 and 2009,” Ind said.
It has made one exit of residential care provider Healthcare Homes and refinanced property service company Leaders Lettings.
Typically, Bowmark will hold an investment for about five years with conservative levels of leverage.
“We do a lot of buy and build where we use some debt to acquire add-ons, but we would not want to over-gear the company at inception,” Ind said.
Its fifth fund, a 2014-vintage, £375 million vehicle was oversubscribed and has made two investments in Autodata Publishing Group and insurance company Aston Scott.
When asked about the impact of the increasing size of its funds on strategy, Ind said, “That is the tension. You want to move your business forward but you don’t want move out of your deal space.”