Dunedin raises £250m for second buyout fund

Fifteen new investors have committed to DBFII, closing above its original target of £200m.

Dunedin Capital Partners, a UK mid-market private equity firm, has raised £250 million (€370.7 million; $470 million) in commitments for its second buyout fund, significantly above its original target.

Marshall: LP interest in smaller UK buyouts

Ross Marshall, chief executive of Dunedin Capital Partners, said that marketing for Dunedin Buyout Fund II (DBFII) began in early summer of this year with a target of £200 million: “Investor demand was pretty high, which is a reflection of the demand for smaller UK buyouts together with our track record. We were significantly oversubscribed at our hard cap of £250 million and had to turn away a number of investors.”
The LP group for DBFII comprised 21 investors, including 15 new investors from the UK and Europe and six investors from Dunedin’s first buyout fund, which raised £54 million in 2002.  The fund will invest in UK mid-market buyouts with transaction values of £10 million to £75 million and can invest up to £50 million of equity in any one deal.
Marshall confirmed that listed vehicle Dunedin Enterprise Investment Trust committed £75 million to DBFII. Approximately 50 percent of new commitments were raised from UK-based limited partners and 50 percent from Europe. Investors included investment companies, private equity funds of funds, pension funds, life companies, banks and family offices.
JPMorgan Cazenove was placement agent for the fundraising, with SJ Berwin providing legal advice.
Marshall said that fund II is nearer two-and-a-half times its predecessor, as the £54 million first buyout fund co-invested alongside Dunedin Enterprise Investment Trust: “The investment trust previously co-invested side by side with the first buyout fund. This time around, the investment trust is a limited partner in the fund.”
Dunedin has reported that the first fund has a realised return of 3.7 times and a 42 percent IRR. Marshall said that there are a number of deals in the pipeline for fund II, but declined to provide details.
In August, Dunedin Capital Partners invested £15.6 million of equity to acquire Bridgepoint’s 70 percent stake in IT systems integrator Capula in a £30 million secondary management buyout. In July, the firm completed the £21 million buy-in management buyout of ECT Ventures, a meeting, training and events business.
Realisations in the last 12 months include the £62 million sale of UK modular building business Caledonian Building Systems to Champion Enterprises of the US, with a money multiple of 5.8 times and an IRR of 100 percent; and Letts Filofax, sold to Phoenix Equity Partners in a £45 million secondary buyout, generating proceeds of £42.2 million, a sixfold money multiple and an IRR of 52 percent.