Primary Capital raises £200m for fund III

The UK mid-market investor has garnered twice the capital raised for its second vehicle, which closed in 2002.

London-based mid-market private equity firm Primary Capital has held a final close of its third fund at a hard cap of £200 million (€287 million; $348 million), twice the size of its previous vehicle.
Primary Capital began marketing Primary III in October last year and reached a first close of around £140 million in December, according to Graham Heddle, director at Primary Capital. The firm said the December first closing was designed to accommodate limited partners investing out of their 2005 allocations.
The new fund received commitments from insurance companies, corporate and local authority pension funds, funds of funds, endowments and high net worth individuals. Regionally, just over 40 percent of allocations were raised from UK investors, 35 percent from the US and the remainder from Continental Europe.
Approximately 75 percent of the 19 investors in Primary III were existing investors in Primary Capital vehicles.
Heddle confirmed that Primary II, which raised £100 million in March 2002, is now fully invested following a £4 million development capital financing in UK mobile content specialist Fonestarz last month. In total, fund II invested in 11 companies, including the £10 million management buyout of fast food chain Yo! Sushi in August 2003.
Primary Capital’s £61 million debut fund made seven investments in total.
Heddle said the investment strategy for Primary III remains largely unchanged despite the increase in fund size. The firm will look to do three to four deals per year on average, principally in the UK, but also with a focus on continental Europe, particularly Germany. In total, Heddle expects the new vehicle to make between 10 and 14 investments.
Primary Capital invests in businesses with enterprise values between £10 million and £100 million, with a specific focus on consumer goods, business and support services, leisure, healthcare, IT services and software and specialist engineering sectors.
Heddle told PEO that Primary Capital is currently looking to hire “a couple of associates and a person in deal origination”. The firm currently has seven investment directors and four support staff operating out of London.