Gresham Private Equity has pushed back fundraising for its fifth fund until the beginning of 2014, according to several sources close to the matter.
The UK-focused firm, which plans to target £300 million for its Fund V, started to speak to investors in April 2012, one source told Private Equity International. However, after speaking to LPs, Gresham concluded investors needed to see a few more exits before they would consider re-upping, another source said.
Rather than “hitting a brick wall” during fundraising, Gresham decided to work on its portfolio and come to market next year, the second source said.
Gresham declined to comment.
Its current fund, a £340 million 2006 vintage, which is almost fully invested but has capital left for add-on acquisitions, has had one high-profile failure.
In 2009, Betts Global, a toothpaste tube manufacturer, went into administration, after the business couldn’t keep up its debt repayments. Gresham bought the company in 2007 for £110 million from a consortium involving UK buyout firm Permira and Scottish banks RBS and HBOS. The deal consisted of £75 million of debt, which was provided and underwritten by CIT Capital Finance, PEI reported at the time.
In 2009, Gresham’s managing partner, Paul Marson-Smith, told The Telegraph that “things didn’t go according to plan”, but that 14 of the 15 investments in that fund were performing well.
The firm has made a number of good returns in the last 18 months. Early this year, Gresham sold training company 7City for approximately £90 million, netting the firm a 3x return. Last year Gresham exited two investments: it reaped a 4x return on its sale of Olaer in April 2012, and a 3.9x return when it divested Marston Group in June 2012.
The firm’s third fund, a £235 million 2004 vintage, is understood to have delivered LPs a 2.2x return so far.
It is also understood that five investment professionals have left Gresham in recent months: two senior executives and three mid-level investment professionals.
Additionally, Simon Inchley will take over as managing partner in the coming months, while Marson-Smith will become chairman, a newly-created position. Inchley joined Gresham in 1998 and has been head of investments since 2008. Gresham communicated this management transition to its investors last November.
Simon Hemley, a partner at Gresham, has also been promoted to a leadership role in the firm.
Some of the investors in Gresham’s Fund IV include: European Investment Fund, ATP Private Equity Partners, Alpinvest partners, Access Capital Partners, Aviva Investors, EQ group, Mandatum Life Insurance Company Limited, RWB Private Capital Fonds, Scottish Widows Investment Partnership, SL Capital Partners, Tapiola Mutual Pension Insurance Company and West Midlands Pension Fund, according to PEI’s Research and Analytics Division.