Gresham’s Fund III raises £153m

The UK mid-market buyout firm has secured £153m from eleven investors on route to a £200m target, including a £75m cornerstone investment from former parent Zurich Financial.

Gresham, the UK mid-market private equity house, has announced an interim closing on the first fund it is raising since gaining independence from Zurich Financial. Gresham, which is looking to raise £200m, has raised £153m so far.

The firm has secured commitments from eleven investors for the fund, Gresham III, which was launched in April this year. The firm said it hoped to achieve the £200m early in 2004.

 

Following its spinout from Zurich Financial Services in February 2003, Gresham has focused on building a diverse investor base. The £153m has been committed by pension funds, funds of funds and other institutions in the UK and Europe. Zurich remains a key backer of the group, providing a £75m cornerstone investment.

 

Gresham will invest the fund in UK lower mid-market opportunities, sourcing deals through its network of regional investment teams. Last week, the firm hired Andy Marsh, previously a director at AMP Henderson, as an investment director at its Manchester office. The firm also has offices in London and Birmingham.

 

The fund will target management buyouts with typical deal values ranging from £5m to £75m, believing this part of the market to present fewer competitors than other sectors, as well as providing greater scope for operational and strategic improvements.

 

Recent investments include the £7m MBI/MBO of the IT support services firm 2escape2, the £20m expansion funding for 1st Credit, the leading debt purchase and outsourced debt collection agency, and the £25m management buyout of Altair Filter Technology.

 

Paul Marson-Smith, chief executive of Gresham, said: “We are delighted that Gresham III has reached this interim close so quickly, particularly in the current environment, and we are now rapidly approaching our £200m target. Deal flow is looking very good and it remains a buyers market. We believe 2004 will be a vintage year.”

 

Gresham reports a gross realised investment return of 34 per cent and a cash return of 2.4 times on 102 investments made since 1980.

 

IPEL is acting as placement agent to the fundraising. Macfarlanes is providing legal advice.