Panoramic Growth Equity has closed its second fund on £65 million ($93.4 million; €82.5 million) drawing commitments from primarily a mix of UK-based pension funds as well as a European institution.
Panoramic Growth Fund 2, which is double the size of its first fund, included all the investors in the earlier vehicle, which all bar one increased their commitment size, Panoramic Growth Equity founder and partner Malcolm Kpedekpo told Private Equity International. “We had a couple of new investors come in on top of that.”
These new investors included those that the firm had known for a number of years and were unable to invest in Fund I, but were able to come into a larger Fund 2, Kpedekpo said.
The larger fund size will allow the firm to up its investment size from a maximum of £3.4 million to £5 million in any one business. However its core investment range remains “pretty similar” at £1.5-3 million with the potential for follow-on investments. “It gives us more flexibility to invest in certain situations,” Kpedekpo said.
Fund 2 has already made one investment. In January it invested £2.2 million in Staffordshire-based Precision Technologies International. The transaction followed Fund 2’s first close at the end of October last year.
Fund 1, a £34 million, 2009-vintage vehicle, has invested in nine companies and exited three, including two through trade sales and one through a secondary buyout. “There is the mid-market sitting above us,” Kpedekpo said.
Its transactions include development capital investments into advertising technology company Captify, software company Concorde, digital communications provider Dog, video security company Edesix and sausage makers Heck, and the realisation of development capital investments in gas sensing manufacturer Cascade Technologies, which was sold to Emerson Electric, renewable energy distributer Solfex Energy Systems sold to Travis Perkins, and Specialist Tours sold to Kings Park Capital.
The new fund will shift focus to management buyouts of UK-based growth SMEs with a turnover of £5-20 million across sectors.
Changes to the venture capital trust rules that now preclude venture funds from undertaking management buyouts and that aim to encourage investment in early stage businesses that are less than seven years old have created a “significant opportunity for us in the market”, Kpedekpo said. The firm is not bound by those rules and many of its competitors were VCTs.
“There’s less supply of capital in that bit of the market and we are now one of the few providers of capital. We see a great opportunity where demand is a lot stronger than it has been in the past.”
Panoramic was founded by Kpedekpo, Stephen Campbell and David Wilson, who worked together in Bank of Scotland’s growth equity team before spinning out in 2009.