Bowmark Capital closes latest fund on £265m

The lower mid-market UK firm has capitalised on the surging interest in the smaller end of the buyout market as the credit crunch cripples its mega fund peers.

Bowmark Capital, a UK mid-market private equity firm, has closed its latest fund Bowmark Capital Partners IV with total commitments of £265 million, only three months after its launch in October last year.

Bowmark Capital:
funding secured

The fund is 2.5 times its predecessor raised four years ago. It now lines up against a resurgent mid-market with fresh entrants such as Darwin Private Equity, Fidelity Equity Partners and HIG European Capital Partners.

Although restricted primarily to Bowmark’s existing relationships, the fund attracted investor demand significantly in excess of its £265 million cap. 

A total of 23 investors committed to the Fund, including leading institutional investors from Europe and the US, with approximately 80 percent of the capital coming from previous Bowmark investors.  One of the investors told PEO that Bowmark had an IRR from inception of about 40 percent.

Kevin Grassby and Charles Ind, managing partners, originally established the in 1997 as Sagitta Private Equity. It was renamed Bowmark Capital following its management buy-out from the Sagitta group in 2004.

Ind said: “There is always the tension when a fundraising goes well between your ambition to grow the business and sticking to your strategy. We believe the next few years will be a better environment for small deals so we were disciplined about the fund close.”

Bowmark made nine investments in UK mid-market growth companies and two follow-on investments with its last fund.  Three investments were completed in 2007, with an average equity investment of £18.5 million, including co-investments from its limited partners.

The fund will continue to invest in growth-oriented service companies, typically with enterprise values of up to £75 million.  It will target five sectors: business services; leisure; healthcare services; media and IT services. 

Campbell Lutyens acted as sole financial adviser and placement agent.  SJ Berwin acted as UK legal adviser and Ropes and Gray as US legal adviser.