Scottish Equity Partners new fund, SEP II, has raised £80 million three months from the start of its formal fundraising. It will focus on early stage and emerging growth technology companies in sectors such as software, communications, opto-electronics and biotechnology. The firm also intends to expand the geographical focus of its investments to the rest of the UK. The new fund is expected to provide Scottish Equity Partners with investment capital for the next four years or so.
Now that the firm has increased the fund target total to £100 million it expects to finalise the remaining £20m within the next two months – existing SEP II investors have already committed a proportion of this balance. Major investors in SEP II include: Royal Bank of Scotland; Standard Life Investments (European Strategic Partners Fund); Lloyds TSB; European Investment Fund; Westport (UK High Technology Fund) and Bank of Scotland.
The fund will also have a much wider range in terms of investment levels than SEP I which was limited to initial investments of £750,000, increasing to up to £1.5 million over subsequent rounds. SEP II is expected to make investments in the range of £250,000 up to £5 million. Companies backed by SEP I include Atlantech Technologies, Indigo Vision, Quadstone, Orbital Software, Cyclacel, Photonic Materials and TeraHertz.
Calum Paterson, managing director of Scottish Equity Partners, said that the timetable for raising SEP II had been demanding but was necessary since its predecessor fund, SEP I, is now substantially invested. “We were very keen to have the fund ready for the start of this year, and having had a first closing at £80m, we can now take time to consider who to bring in to complete the fund. We expect the second and final closing to be within the next couple of months or so which will take us up to £100m. In the meantime, we are ready to invest from the fund now.
“This is an important milestone in the context of our expansion plans for Scottish Equity Partners, and we are delighted to have received the support of such high calibre investors. Over and above the fund itself, we have the potential to draw on significant additional co-investment funding from some of our backers for individual transactions, so this fundamentally transforms the value proposition we can offer to high growth potential companies”.
Scottish Equity Partners was formed in August 2000 and is owned by its own management. The investment team previously operated as Scottish Development Finance, which was the venture capital arm of Scottish Enterprise, prior to deciding to spin out into their own private equity business.