NorthEdge Capital, a UK-based lower mid-market private equity firm, has closed its debut fund, which targets investments in the lower mid-market in the north of England, on its £225 million hard-cap (€264 million, $345 million).
It marks one of the largest first-time fundraisings in Europe since 2008, the firm claimed in a statement. NorthEdge, which put in a 2 percent GP commitment, held a £125 million first close last summer.
NorthEdge Capital Fund I, which used a UBS team led by James Moore as a placement agent, attracted commitments from 15 global institutional investors, including CNP Assurances, European Investment Fund, Industriens Pension, MLC Investments, Pathway Capital Partners and West Yorkshire Pension Fund. About 48 percent of the commitments came from Europe, 42 percent from the US and 10 percent from Australia.
“The fact we used UBS, which gave us access to their global client base, probably has a reasonable amount to do with the nature of our investors and their geographic location,” Grant Berry, NorthEdge’s managing partner told Private Equity International. The firm attracted several different types of investors, he added. “We have family offices, funds of funds, some insurers; it’s quite a strong spread of different institutions.”
Although NorthEdge reached it hard-cap, the process was still a challenging one, Berry said. “It was difficult; we are a first time fund. But a number of us worked together before [at LDC, the private equity arm of Lloyds Banking Group], which certainly helped.”
It’s a big market in its own right; it consistently [accounts for] 25 percent of UK lower mid-market buyout volume, but there are fewer private equity practitioners with genuinely established teams [than in London and the south-east]
However the “overriding factor” for the successful close was the fund’s focus on the north of England, which is “really an attractive place for investments”, he said. “It’s a big market in its own right; it consistently [accounts for] 25 percent of UK lower mid-market buyout volume, but there are fewer private equity practitioners with genuinely established teams [than in London and the south-east]. So a combination of a good sized market [and a lack of competition] helped considerably.”
“I think there’s a misconception that in the north of England there are purely manufacturing businesses, [which are] very reliant on the local economy,” he added. “There are some very strong IT and software businesses up here [as well as] television, production and media businesses.”
NorthEdge, which has offices in Manchester and Leeds, was established in 2009 by co-founders Andy Ball, Grant Berry, Dan Wright and Emma Rawlinson. NorthEdge expanded its senior team in recent years with the appointment of Michael Joseph as chairman and Ray Stenton as a partner.
The generalist firm targets investments between £5 million and £35 million in businesses with an enterprise value of between £10 million and £100 million. In February, NorthEdge completed its first deal when it acquired a significant stake in FPE Global, a high-growth specialist engineering business in Stockport.
An SJ Berwin team, led by Duncan Woollard, acted as legal adviser, while Vicky Mudford provided investor-related advisory services.