Bridges Ventures has closed its third investment fund on £125 million, above its original target of £100 million.
The UK-based investment group, which was originally founded by Sir Ronald Cohen to invest in businesses that seek both social and financial returns, held a first close on approximately £73 million in December 2011.
The firm, which provides growth capital to small and medium sized businesses operating in the health and well-being, education and environmental sectors, and/ or operate in under-served areas.
The exact re-up rate was unclear, but in the first close – which was about the same size as the firm's entire previous fund – Bridges was primarily backed by existing investors, including Royal London Asset Management, HSBC, West Midlands Pension Fund, South Yorkshire Pensions Authority, 3i, Doughty Hanson, Wittington Investments, All Souls College, Merton College, the R&S Cohen Foundation and SHINE, as well as a number of family offices and high net worth individuals.
The firm’s Fund III is substantially larger than both its £75 million predecessor which closed in 2007 and Bridges’ first £40 million vehicle which closed in 2002. Bridges didn’t use a placement agent.
“It was a very interesting capital raise,” Michele Giddens, co-founder of Bridges Ventures, told Private Equity International. “On the one hand, it was a very challenging time in the private equity space. A lot of LPs were focused on consolidating their existing relationships so [it was] actually quite a difficult time to [establish] new relationships with new LPs. On the other hand, the level of interest in impact investing is very clearly rising.”
On the one hand, it was a very challenging time in the private equity space. A lot of LPs were focused on consolidating their existing relationships so actually quite a difficult time to [establish] new relationships with new LPs. On the other hand, the level of interest in an ESG approach, sustainable investment and impact investing is very clearly rising
This increased appetite for social impact investing, combined with the fact that Bridges had four very strong exits in the last year, resulted in a successful fundraise, according to Giddens.
The interest in social impact investing will grow, she insisted. “Partly just because there are some big social and environmental challenges out there and it is not going to be possible for government and non-profit sectors to solve all of them, but also because some of the [players] that have been early to this such as Bridges Ventures around the world and others around the world are beginning to have a track record, which makes it much easier for institutional investors to allocate to us.”
None of Bridges’ funds have been fully divested yet. But the firm has made “10 successful exits” with money “multiples ranging from 2x to 22x”, according to Giddens. “In our first fund, cash is back with investors and has a healthy surplus in cash and eight companies still within the portfolio. Fund II has just finished its investment period and it has already 60 percent of cash paid back – which is very high for a 2007-vintage fund,” she added.
In June, Bridges exited low-cost gym operator The Gym, netting a 3.7x return, whilst retaining a 25 percent stake in the business.
Bridges' latest fund has made three investments so far, including The Vet, a Bristol-based veterinary service which provides clinical pet care at affordable prices to pet owners.