Next Wave hunts for co-investing LPs – Exclusive

The SME investor is seeking to raise capital following a number of successful exits.

UK lower mid-market firm Next Wave Partners has begun fundraising for its second vehicle. The firm is seeking to raise £80 million ($117 million €102 million) from a small group of investors, managing partner Jonathan Brod said. “It will be a fairly targeted fundraising process.”

Next Wave has already raised about half of its target amount in soft commitments from existing investors, which include family offices and some institutions, and is looking to bring in two or three new LPs that also have an interest in co-investment, according to a source with knowledge of the matter.

The firm has “a very good track record in offering attractive co-investment opportunities to our existing investors and would look to continue to offer such opportunities to any new LPs,” Brod said.

Placement agent Acanthus is understood to be assisting with the fundraising.

“Next Wave has a rich pipeline of deals and want to reach a first close pre-Brexit [referendum in the UK in late June on whether the leave the European Union] and a second close after the summer,” the source said.

The firm is talking with investors following its partial exit this week of its investment in London-based polymer packaging company Petainer UK Holdings through a €100 million debt and equity investment from KKR Credit.

Next Wave, which made an initial investment in the company of £6 million and still retains control, has returned €40 million to its investors through the transaction, it said in a statement.

In September the firm partially exited fishing tackle manufacturer Fox International through a secondary management buyout having originally acquired the company from its founding family owners in 2014. The transaction generated a 3.1x return and an IRR of 155 percent, the source said.

The generalist firm, which has experience in industrial and consumer sectors and seeks control stakes in companies.
“We target equity tickets of £5-20m in UK SMEs where there is clear value at entry and potential to drive strong growth through the professionalisation and strategic transformation of businesses,” Brod said.

Its portfolio companies include Swedish facilities management business Crendo, London-based brand development company Future Thinking, UK specialist lighting company LAUK, London-based TV and film post-production company Molinare and UK postal service company The Delivery Group, according to its website.

Next Wave has more than £100 million of funds under management. 

Acanthus declined to comment.