Sagitta Private Equity has closed its Sagitta Private Equity Partners III fund at £105 million (€157 million; $196 million), less than eight months after it was launched in the summer of 2003.
The fundraising coincides with Sagitta Private Equity becoming an independent firm, with the management team having bought itself out from investment manager Sagitta Group. In a statement, Sagitta Private Equity said “close ties” would be maintained with its former parent organisation.
The firm says investor demand meant it could have raised “significantly in excess” of the final amount, but capped the fund so it could retain its focus on small companies. Investors in Europe and the US comprised: funds of funds (24 percent); public pension funds (24 percent); insurance companies (19 percent); investment managers (19 percent); and family offices (14 percent).
The fundraising underlines strong institutional support for UK mid-market propositions. Last year, Graphite Capital closed its sixth fund on £375 million, 25 percent ahead of its £300m target. Gresham has already raised £153 million of a planned £200m fund that is expected to close in the first half of this year.
Sagitta will use the capital to back companies with an enterprise value of between £5 million and £30 million. It will invest in management buyouts, buy-ins, build-ups, rollouts, acquisitions, and development capital financings of established growth businesses.
Campbell Lutyens acted as sole financial adviser and placement agent on the fundraising, as well as advising on the buyout. “Recently, institutional investors have become far more cautious in their private equity investments, typically leading to more selective fundraisings and a flight to quality,” said Andrew Sealey, managing director of Campbell Lutyens.
He added: “Sagitta Private Equity is a firm that we believe brings an unusual level of experience and professionalism to a somewhat neglected part of the market that has the potential to generate superior returns.”
Sagitta Private Equity has approximately £200 million under management and advice, and has backed over 30 companies in the business services, leisure, healthcare services, media and information technology sectors. The firm is jointly run by Charles Ind, who set up Sagitta’s private equity business in 1997, and Kevin Grassby, who joined in 2000 from Nash Sells & Partners (now Sovereign Capital), where he was a founding partner.