Promethean Investments, a UK-based firm focused on distressed and special situations, has held a first close on £19 million for its second fund, according to a source familiar with the matter.
Promethean UK Opportunities Fund II came to market in April with a £150 million target and £250 million hard-cap. It is understood that the firm has attracted a Middle Eastern-based group and a US family office as cornerstone investors in the fund. Promethean will target an investment multiple of 2.5x and a gross internal rate of return of 30 percent.
Promethean declined to comment.
The firm plans to do approximately 12 deals in the fund, with the equity capital ranging from £10 million to £30 million. Promethean will put in a general partner commitment of between 1 and 1.5 percent, depending on the size of the final close. It is understood Promethean aims to hold an intermediate close in December, before wrapping up fundraising at the end of Q1 next year.
Promethean was founded in 2005 by Sir Peter Burt, a former executive deputy chairman of Halifax Bank of Scotland, and his son Michael Burt, former head of Private Equity at Collins Stew. The firm’s latest fund differs from its first fund, a £50 million, 2005-vintage, which was established as an evergreen structure. After the credit crunch investors decided they wanted to see the portfolio realised. Fund I was fully invested after two years and has made 2x and a 40 percent IRR, according to the source.
The sole investor in that first fund was Promethean plc. The current team bought out the manager from the listed vehicle in 2012. Between Fund I and Fund II, Promethean completed three transactions on a deal by deal basis, worth a combined £200 million.
Sir Peter has worked in financial services for decades. In 1996 he was appointed as chief executive of Bank of Scotland, where he led the bank's £21 billion bid for National Westminster Bank. In 2001, he initiated and managed the £30 billion merger with Halifax to form HBOS plc, where he became executive deputy chairman in September 2001 until his retirement in January 2003. He has also been a senior advisor at Apax Partners and has acted as a non-executive director at Royal Dutch Shell.
Promethean targets distressed and special situations in the UK lower mid-market, including companies which fail to attract bank financing and underperforming companies with short term financial pressures. It also targets failed auctions where assets are difficult to value or sell.