Inflexion boosts firepower with double fundraise

The UK firm has raised £500m for a co-investment vehicle and a lower mid-market fund in just 8 weeks.

Inflexion Private Equity, a UK-based mid-market private equity firm, has raised £500 million (€656 million; $730 million) for two investment vehicles, its second double fundraising in 18 months, according to a statement from the firm.

The firm closed Inflexion Enterprise Fund IV and Inflexion Supplemental Fund IV within just eight weeks of launch, holding a first and final close on both funds on their £250 million hard-caps.

Inflexion raised the capital entirely from existing investors and without the support of a placement agent, the firm said. Among the funds’ investor bases is Illinois Municipal Retirement Fund, which committed £17 million to the Supplemental Fund and £15 million to the Enterprise Fund, according to PEI Research & Analytics.

The Supplemental Fund will invest alongside the £650 million Inflexion Buyout Fund IV and the £400 million Inflexion Partnership Capital Fund I, for which the firm held a double final closing in autumn 2014. These vehicles are both around 30 percent deployed.

At the time of the funds’ closing Inflexion managing partner Simon Turner told Private Equity International that the firm had “no plans to raise another co-investment vehicle”.

Turner told PEI today that the decision to raise a co-investment vehicle was “based on what we’ve been seeing and what we’ve been doing”.

“We have a need for co-investment on a few of the larger deals that we’ve done, and if you’ve got good line of sight on some other sizeable assets, it’s just a sensible solution to a practical issue,” Turner said.

“That’s the approach we’ve always taken with these co-investment funds, to raise them when we need them.”

The flagship buyout fund is considerably larger than its predecessor, a 2010-vintage vehicle, which closed on £375 million. The companion co-investment vehicle, Inflexion 2012 Co-Investment Fund, closed above target on £100 million.

The Inflexion Partnership Capital Fund I, which focuses on minority investments, is headed up by partner David Whileman, who joined Inflexion from 3i in September 2013.

The enterprise fund is focused on the lower mid-market and will seek to back high-growth, entrepreneurial businesses with ambitious management teams, the firm said. It will make equity investments of £10-20 million for majority or minority stakes in businesses across all sectors and regions of the UK.

“When you’re investing a £650 million fund, which is the main buyout fund today, you tend to focus on the slightly larger end of the mid-market dealflow that we traditionally would see, which is why the enterprise fund of course fits so neatly to pick up some of the smaller opportunities,” Turner said.

The flagship buyout fund, the partnership capital fund, and the enterprise fund are all successors to the 2010 buyout fund, Turner explained.

“We’re keen that we sit squarely across a broad tranche of the mid-market, able to offer a solution that’s really tailored to different opportunities, be they [in] the slightly smaller fund and fast-growing, be they structured minority positions, or be they some of the more mid-sized buyouts where perhaps investment is required to obviously get involved in the business but also to perhaps internationalise a business of scale. We want to be able to provide a solution across all three of those themes.”

The enterprise fund team, led by partner and investment committee member Tim Smallbone, currently has five investment professionals, with plans to boost this to eight or nine over the course of the year, Turner said.