Graphite raises £555m for investment

UK mid-market firm Graphite Capital has raised £475 million for its seventh fund and another £80 million for a co-investment fund, taking its total firepower to £555 million.

London-based Graphite Capital has closed its seventh fund, Graphite Capital Partners VII, on £475 million (€695 million, $939 million), and has raised another £80 million for a co-investment fund. The co-investment fund will invest alongside Graphite Capital Partners VII in some of the fund’s bigger deals.

Rod Richards, managing partner at Graphite, said: “We didn’t want to raise too much more capital than than we did for the previous fund because of the increased mid-market competition – we didn’t want to have too much capital chasing not enough deals.”

“The co-investment fund gives us more firepower for the bigger deals and means that these deals won’t imbalance the core fund.”

The fund attracted commitments from 39 investors, of which 39 percent came from the UK, 36 percent from Europe and the other 25 percent from the US and Japan. The firm’s previous fund, Graphite Capital Partners VI, closed in June 2003 having raised £375 million from 39 investors.

The UK mid-market has been active on the fundraising side so far in 2007 – Englefield Capital has closed a €1 billion fund and Doughty Hanson has raised a €3 billion fund. European mid-market fundraising was prolific in 2006. The segment raised €15 billion through 17 funds, up from €5.1 billion through six funds in 2004, according to Private Equity Intelligence.

One of Graphite’s most successful deals has been Wagamama, a noodle bar chain, which the firm sold to Lion Capital, a consumer sector-focused UK buyout firm, in June 2005. The deal generated an internal rate of return of 40 percent and an overall return of 10.2 times the original investment for Graphite.

Graphite now has £1.2 billion under management.