Gresham, a UK-based middle market private equity firm, told investors this morning that it will not raise another fund, and will return cash. The announcement follows earlier efforts to restructure, and several notable exits.
Gresham has faced an uphill battle on the fundraising trail. The firm closed its Fund IV on £340 million in 2006, during the pre-crisis fundraising bubble. One source told Private Equity International in March that in hindsight the fund was too large, and pushed the firm into larger deals than it was prepared for. Some of those deals have underperformed and another failed outright. In January, PEI reported that the company quietly lost six partners after losing five in the year prior.
For a moment, Gresham looked as though it was on the rebound with several impressive exits including ICR which generated a 4x return, Hotter Shoes which booked 3.7x, and Swift at 2x. Yet, despite some investor interest in a new fund, sources familiar with the matter said it wasn’t enough to justify going forward.
The existing management team will stay in place through the end of the realization process for the remaining five companies in the portfolio. All five companies are based in the UK. Sources said that the firm will not be pursuing sales on the secondaries market for the companies.
“After a tough start to the Gresham 4 fund in difficult economic circumstances, I am proud of the progress the team has made since 2008, delivering on a revised strategy and leading a strong recovery in our fund valuation and liquidity generation. However, despite this achievement, the quality of our team and the firm’s long track record, the reality is that we will not be able to raise a sufficiently large fund in an acceptable timeframe. The senior management team is completely aligned and remains focused on generating the best value out of our investments. The timing of this decision is designed to ensure that we have sufficient resource and time to deliver on this,” Simon Inchley, Gresham CEO said in a statement.