Exclusive: Exponent to close Fund III on £1bn hard-cap

UK-based Exponent Private Equity is eyeing a £1 billion (€1.34 billion, $1.52 billion) final close for its third fund, PEI has learnt.

The firm’s fund, which is oversubscribed, already had “investor demand of up to £1 billion late last year”, according to a source familiar with the matter. Exponent is currently processing the commitments ahead of the fund close, the source added.

The vehicle, which came to market last year targeting £800 million, held a first close of around £500 million in December.

London-based placement agent Campbell Lutyens has supported Exponent with the fundraising, it is understood. Both Campbell Lutyens and Exponent declined to comment.

News of the fundraising comes as Exponent is eyeing an investment in Big Bus Tours, a British sightseeing company, according to a source familiar with the matter. It is understood that the firm is in exclusive negotiations to acquire the company. That story was first reported by Reuters, which said the tourist business could be worth up to £500 million.

Last week, Exponent listed HSS Hire Group on the London Stock Exchange having owned the business since 2012. In January, Exponent sold Trainline, a UK-based online retailer for rail tickets to KKR for between £425 million and £450 million (€588 million, $683 million). Last October, Exponent also sold Gorkana Group to Chicago-based private equity firm GTCR for around £200 million, PEI reported at the time.

Exponent’s latest fund will be larger than its second fund, a £805 million vehicle raised in 2008. Investors in that fund included Los Angeles County Employees' Retirement Association, Massachusetts Pension Reserves Investment Management Board (MassPRIM), New York Life Insurance Company, Pantheon, Alaska Permanent Fund and OMERS Private Equity, according to PEI’s Research and Analytics division.

In October 2013, the firm sold its majority stake in The Ambassador Theatre Group to Providence Equity Partners in a deal that valued the business at £350 million, netting Exponent a 5.2x return.

But not all Exponent deals have been successful. UK bed store Dreams – which Exponent acquired in 2008 – went into administration in 2013 having struggled through the economic downturn. The business was subsequently acquired by Sun European Partners.

Exponent typically invests in UK-based businesses with an enterprise value of between £75 million (€91 million, $125 million) and £350 million.

The firm joins a number of UK firms that have successfully raised capital in recent months. Last October, Inflexion Private Equity raised £1.05 billion for two investment vehicles. Last September, ECI Partners closed it tenth fund on its £500 million (€626 million, $823 million) hard-cap, while in August, Sovereign Capital closed its fourth fund on its £395 million (€497 million, $655 million) hard-cap.