Graphite speeds to £475m fund close

The UK mid-market firm says its new fund – raised in just seven months without the help of a placement agent – is the largest of its kind since the crisis hit.

Graphite Capital, a UK-based mid-market firm, has closed its eighth buyout fund on its target of £475 million after just seven months in market. 

While Graphite is no longer marketing the fund to investors, the firm is still planning to accept capital from a couple of LPs who were not able to meet the deadline for this close. This is expected to take the final fund total above the £500 million mark.

Graphite began talking to a select few investors late last year, but only started officially marketing Graphite Capital Partners VIII in February. Managing partner Rod Richards told Private Equity International that the firm had always targeted a summer close – and was able to create the necessary momentum thanks partly to strong support from existing investors. 85 percent of commitments came from existing investors, some of whom re-upped “substantially”, he said. 

PEI reported back in July that a “one and done” close was on the cards for Graphite.

The firm – whose listed vehicle, Graphite Enterprise Trust, invests in other mid-market groups around Europe – said the fund was the largest UK-focused vehicle raised in the last five years.

40 percent of commitments came from the UK and 25 percent from continental Europe. The remaining 35 percent from came from US investors and one large Japanese institution (which the firm declined to name).

Graphite said its track record during the downturn had been the key to its fundraising success. All eleven investments made from its previous fund – which also closed on £475 million, back in 2007 – “have increased both sales and EBITDA, many very substantially,” the firm said. Between them, these companies have also created 2,500 additional new jobs, it added.

Like the firm's previous fund, the new fund includes a ‘top-up’ vehicle – currently about £50 million in size – that Graphite can call upon for additional firepower if it wants to do deals requiring a larger equity cheque than the fund would typically provide. A small number of investors in the main fund have put additional capital into this vehicle. They will receive reduced economics on this portion – a 1 percent fee on drawn-down capital only – allowing them to average down their fees across the piece.

The firm chose not to use a placement agent, simply because it “didn't think [it] needed to”, according to Richards.

Graphite said it would continue to invest “primarily in companies with high growth potential valued at between £40 million and £150 million”. It expects the new fund to be “slightly more concentrated” than the previous fund: it will make slightly fewer investments than the previous fund, with a slightly higher average equity ticket.