Exponent races to £400m final close

Closed less than five months after launch, the UK mid-market fund formed by four ex-3i executives plans to invest up to £100m per transaction.

Exponent Private Equity has announced a final closing of its debut fund, Exponent Private Equity Partners, less than five months after it was launched.

The fund had an initial target of £300 to £350 million, but following a first close last month, the target was quickly surpassed. The fund has now been capped at £400 million (€595 million; $730 million). Despite substantial investor demand according to the firm, Exponent decided against making the fund any larger. Chris Graham, one of the founders, said: “We decided there was considerable merit in being a tightly focused business, concentrating on making high quality investments.”

The fund attracted a broad range of institutional investors from around the globe including 28 percent from the UK, 30 percent from continental Europe and 42 percent from the US.

Investors in the fund include Allianz Private Equity, Danske Private Equity, HarbourVest Partners, Hermes Private Equity, LGT Capital Partners, West Midlands Metropolitan Authorities Pension Fund, Massachusetts PRIM and funds advised by SCM Strategic Capital Management AG among others.

Alongside Graham, the Exponent team comprises Tom Sweet-Escott, Richard Campin and Hugh Richards who worked together on buyout investments at 3i.

In an interview with PrivateEquityOnline, Campin said that the reason for the successful, swift closing of the fund had been due to investor appetite for the fund’s focus – dedicated to the UK, with no pan-European business to leverage. Campin also said investors considered the founding quartet a a complementary team: “Investors liked the fact that we are hungry. This has to work for us and we will be involved at every level – the four of us make up the investment committee and we will all meet every management team.”

The firm has not completed any transactions, having concentrated on the fundraising process over the summer. Campin said that, with the final closing, the team would be “hitting the ground hard”, looking to do deals in September.

The fund will be “opportunistic in the mid-market” said Campin, although core areas of focus will be media, financial and support services. Within the mid-market sector the firm is looking to invest in larger, complex transactions and to invest up to £100 million in any one transaction.

Investor appetite for the Exponent fund has been in contrast to that experienced by other, larger funds that are currently in the marketplace. UK-based Doughty Hanson held a €700 million first close of a proposed €3 billion fund last year, and pan-European house Industri Kapital has raised €500 million towards a proposed €2.5 billion new fund.

Helix Associates acted as placement agent for the Exponent fund.