SEP launches Fund III with £120m

Glasgow-based venture capital firm Scottish Equity Partners (SEP) has launched its third venture capital fund, having already raised £120 million (€172 million; $214 million) from UK and European institutional investors.
 
Calum Paterson, managing director of SEP, said in an interview that a decision on the final target size of the vehicle has yet to be made, but that fundraising is expected to be completed “over the next couple of months”. No placement agent was used for the fundraising, added Paterson.
 

Paterson: fund III target size to be decided in next few months

Paterson said Fund III will be one of the largest UK technology-focused venture capital funds to be raised in the last few years. “It’s not a case of raising as much money as we can,” he added, “but of raising the right amount for the current market.”
 
Approximately half of allocations to Fund III so far have come from UK institutional investors and the other half from European limited partners. Paterson said the firm has not held talks with investors outside of Europe. He added there was a similar 50:50 split between new and existing investors in SEP funds to the new vehicle.
 
Fund III’s predecessor closed on £110 million in 2000 and is fully invested in 30 companies, said Paterson. Successful exits from the fund include Bluetooth technology developer Cambridge Silicon Radio, which floated on the London Stock Exchange in March 2004 with a capitalisation of £240 million; semiconductor chip maker Wolfson Microelectronics, which floated at the end of 2003, raising £250 million; and anti-fraud software company Searchspace, which was sold to Warburg Pincus for an undisclosed sum last September.
 
Fund I, which raised £25 million in 1997, invested in about 35 companies, according to Paterson.
 
Fund III will follow its predecessor’s strategy of investing between £1 million and £10 million in transactions of up to £30 million. Paterson said the majority of SEP’s deals are co-investments, and the firm led approximately 90 percent of its Fund II transactions.
 
SEP’s target sectors are information technology, healthcare and energy-related technologies.
 
Scottish Equity Partners was established in 2000 and has 22 employees, of which 12 are investment professionals, operating out of offices in Glasgow and London.