Cairngorm Capital expects to announce the first transaction from its debut fund early next year.
The £52.5 million ($79.7 million; €74.9 million) fund held its first and final close in early September and is expected to be fully invested eighteen months from now having made about three investments, Cairngorm founding partner Andrew Steel told Private Equity International.
Cairngorm plans to launch its second fund in early 2017, which “will be quite a bit larger”, Steel said, adding that its first fund – which he described as a “starter” vehicle – will not have made any exits.
Cairngorm Capital I will invest an average equity cheque of £15 million into UK businesses with an enterprise value of about £50 million in mature industries in sectors including specialised manufacturing and distribution.
The firm will seek opportunities to transform the underlying business, working with management to boost revenues by, for instance, expanding a business internationally or pursuing a buy and build strategy. The firm will look at companies with 2-3 percent margins, seeking to grow them to 10-12 percent, Steel said.
The appointment of Alex Bayliss and John Naylor-Leyland as investment directors brings the management team to six senior executives, and makes it complete for the meantime, Steel said.
“[We] needed some experienced talent in the firm to help handle execution workload and are really delighted to have John and Alex on our team.”
Steel and Bayliss worked together at HIG Capital before Bayliss founded SEA Equity. Naylor-Leyland was previously a partner at Disruptive Capital, and prior to that worked at UBS.
Cairngorm was founded in 2014 and Steel began talking to investors at the beginning of this year. The firm raised the fund from three limited partners through a reverse solicitation process, as reported previously by PEI.