August Equity nears £200m target

UK lower mid-market investor August Equity has exceeded its £180m target and is close to reaching its hard-cap for its latest vehicle August Equity Fund III. The firm hit a £100m first close in June.

August will have needed to extensively diversify its investor base, since, unlike some other mid-market successes, 40% of its existing LPs were unable to re-up.

Fund III has made two investments to date, according to unquote" data: its first was London-based schools group Minerva Education, which saw August pump a reported £25m into the business it had been tracking for a number of years. Most recently it backed Essex-based care home operator Old Deanery Care Village.

Another two investments are scheduled to be announced in January, meaning incoming investors have visibility on where around 40% of the fund would be put to work, which may entice LPs in today's difficult market.

Equistone's latest fund, which was raised nearly a year ago, was another example of a vehicle able to show investors where the money would be put to work. A full year between first close and final – with many interims to crystallise LP interest – meant investors had visibility on where around a third of the fund would be invested. That fund – the firm's first since independence – hit its hard-cap on €1.5bn in January 2013.

Investors in August Fund III include Partners Group, JP Morgan, Akina and PPM Managers.

August's first fund has achieved a realised return of nearly 3x to date and its second fund has already completed two exits and paid back almost half the fund's committed capital.

According to unquote" data, August sold UK domiciliary care provider Enara to listed trade player Mitie for £111m in Q4 2012, marking Fund II's first exit. The GP had backed the business in 2008 when it funded the £20m buyout, subsequently growing profits 15-fold and bolting on more than 50 businesses.

The new fund will invest £10-30m of equity in deals in the healthcare, pharma, technology services and education sectors. According to unquote" data, this is in line with the firm's previous fund, which raised £155m at its May 2008 close and charged a management fee of 2%.

August Equity declined to comment.

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