ECI closes tenth fund on £500m hard-cap

Existing investors make up 80% of the fund, increasing their commitment by 33% on average

UK-based ECI Partners has closed its tenth fund on its £500 million (€626 million, $823 million) hard-cap after just five months in market, according to a statement.

The firm officially launched the fundraising in April, targeting £400 million. The vehicle held a first close on £350 million in July.

Capital in ECI 10 came predominantly from ECI’s existing investors, who contributed 80 percent of the fund, with an average increase on prior commitments of 33 percent. All told, ECI 10 attracted 25 institutional investors, five of which were new LPs, from the UK, US, Europe, the Middle East and Australia. LPs include pension funds, fund of funds, insurance companies, endowments and family offices. For the first time, ECI also attracted a sovereign wealth fund, ECI managing partner Sean Whelan told Private Equity international.

The fundraising went well, due to the firm’s successful track-record, Whelan added. “Some of [our LPs] have been with us for over 20 years, and that reflects the general sense that we have been delivering consistently over multiple funds and during multiple cycles.”

In the last 12 to 15 months, ECI’s exits have delivered a 3.7x multiple on aggregate, he said. “Also if you look at the underlying growth in the portfolio, it proves there are some very interesting niche growth businesses within the UK. We are seeing underlying EBITDA growth north of 20 percent, and turnover growth in the high teens.”

ECI put in a GP commitment of more than 2 percent, which is more than double than in the last fund, Whelan said.

The firm will also offer co-investments to its core LPs depending on the type of deal – although there are no formal arrangements in the fund terms, he stressed. “Certainly there has been an increasing interest in co-investment; we have offered [them] in ECI 9 and previous funds. We are happy to offer co-investments for the right type of deal, but we would only use it in select circumstances, [because] we want to stick to our strategy and [don’t want to invest] outside our deal size range.”

ECI’s latest fund will have the same strategy as its prior vehicles: targeting growth buyouts in the UK with an enterprise value of between £10 million and 150 million. The firm typically invests in TMT, business services, consumer, industrial and healthcare companies.

ECI 10 is slightly larger than the firm’s prior vehicle ECI 9, a £437 million fund which started investing in 2010 and is almost fully deployed. In March, it sealed its first exit from ECI 9 when it sold CarTrawler, an Irish online car rental business, to BC Partners, netting the firm a 6x return.