Tenon to raise £20m turnaround fund

The AIM-listed accountancy firm has launched a fund management business, TenonCap.

Tenon, a UK accounting firm focused on small- and medium-sized businesses, is to launch Tenon Capital Management, or TenonCap, which will manage T-Fund I, a fund formed to invest in turnaround opportunities in businesses with a turnover of between £5 million (€6.4 million; $8.2 million) and £30 million.

TenonCap is seeking to raise up to £20 million for the fund, which will be marketed to both institutional investors and high net worth individuals. The cornerstone investment from Tenon and the TenonCap management totals £1.75 million.

TenonCap’s investment committee, led by chief executive officer Matthew Bowker, intends to draw on the associated accountancy firm’s resources – in particular the corporate finance function – in sourcing deals and effecting turnarounds.

The fund will seek to buy bank debt related to distressed UK businesses and “allow the companyies' management to concentrate on running their businesses instead of fire-fighting their debt,” Bowker told PEO.

Should the firm manage to raise the £20 million targeted, it will build a portfolio of around “a dozen” companies, said Bowker.

Joining Bowker on the investment committee are Andrew Raynor, Carl Jackson and Mark Lucas.

Distressed debt, turnaround and opportunity funds are set to be the “one bright spot in the fundraising market”, Michael Powell, head of alternative assets for the UK's second largest pension, Universities Superannuation Scheme, recently told sister magazine Private Equity International. In related news, Jon Moulton confirmed his firm Alchemy Partners’ intention to raise a second distressed debt fund in the second quarter of 2009.

Tenon Group, listed on London’s Alternative Investment Market, is the 10th largest accountancy firm in the UK by fee income, according to industry trade magazine Accountancy Age, and focuses on advising entrepreneurs.