Inflexion raises £1.05bn for UK deals

The UK mid-market firm has closed two big new funds in just five months

Inflexion Private Equity, a UK-based mid-market private equity firm, has raised more than £1 billion for two investment vehicles after just five months on the road, the firm said today.

Inflexion’s flagship fund, Inflexion Buyout Fund IV, closed on its hard-cap of £650 million, while Inflexion Partnership Capital Fund I, which will make minority investments in the UK mid-market, closed on its hard-cap of £400 million.

Inflexion managing partner Simon Turner told Private Equity International that the speed of the fundraise was largely driven by a re-up rate among existing investors of almost 90 percent. “The core LP base has really followed through,” he said. “It really helps to know you have a really supportive, loyal base of investors.”

According to Inflexion, its LP base now includes more than 35 blue-chip investors, including state and corporate pension plans, insurance companies and sovereign wealth funds from the US, Asia and the Middle East. The GP commitment was “sizeable, but market standard”, he added.

The new pools of capital represent a substantial increase of the firm's firepower. Its previous buyout fund, a 2010-vintage, raised just £375 million.
However, Turner insisted that Inflexion would be pursuing an identical strategy, seeking companies with “exactly the same enterprise values, [and] exactly the same banking relationships.”

The firm had been careful to size the funds in such a way that it would be able to seek out the same sorts of deals as previously – namely investments of between £15 million and £75 million in high growth, entrepreneurial businesses. “We wanted to really stick to a consistent [strategy] that has been really successful for us,” he said.

The partnership capital fund, which will focus on minority investments, isheaded up by partner David Whileman, who joined Inflexion from 3i last September.

“Both funds are targeting businesses with very similar characteristics,” Turner said. “The key change is just the broadening into the partnership capital arena.”

Over the past twelve months Inflexion has invested in five businesses and made more than 10 add-on investments, Turner said. The firm has also successfully exited four portfolio companies, including listing IT services company FDM Group on the London Stock Exchange, which generated a 16.2x return. In December 2013 Inflexion exited the final portfolio company from its 2003-vintage fund, bringing the fund’s overall return to 3.9x, the firm said.

Turner told PEI that Inflexion’s capability to create investment opportunities was high, bolstered by several key new hires in recent months, and it would be “perfectly reasonable” to expect the same pace of investment over the next 12 months. “There’s still plenty of interesting situations out there,” he said of the UK mid-market.

Inflexion’s 2010 buyout fund is around 75 percent committed, according to Turner.
That fund was accompanied by a co-investment vehicle, which closed on its hard-cap of £100 million in 2012 after less than six months in market. However, Turner said that while co-investments have “always been a useful tool, [it is] not really core” with these latest funds. “At the moment we’ve got no plans to raise another co-investment vehicle,” he said.