Dunedin fund surpasses target to reach £300m final close

Unquote" reported a first close for Dunedin Buyout Fund III on £240m in January following an RNS feed from Dunedin's trust, an investor in the vehicle. The statement suggested the trust committed £50m towards the fund.

Investors
Dunedin's previous vehicle, Dunedin Buyout Fund II, closed in September 2006 with commitments of £250m from 21 LPs. The firm's first buyout fund raised £54m in December 2002 and is fully invested. More than half (60%) of LPs for Fund III come from outside the UK, up significantly from Fund II, where 80% were domestic backers. The latest fund has attracted Nordic and US investors for the first time. Investors in the first two funds include Alliance Trust, Bank of Scotland, Scottish Widows Investment Partnership, Dunedin Enterprise Investment Trust, Amec Pension Fund, Cornelian Asset Managers, European Investment Fund, Gartmore, Quartilium/Finama and F&C Private Equity Trust.

Fund III is a 10-year vehicle with a five-year investment period on market standard terms.

Investments
The fund will back UK mid-market businesses in deals ranging from £20-75m EV.

Dunedin has already made its first investment in Trustmarque. The £43m deal, done in June, saw Dunedin acquire the technology solutions business from incumbent backer LDC. Last week, HSBC Leveraged Finance led a £19.5m refinancing of the business. 

Dunedin has made 17 portfolio acquisitions since the end of 2011 and has achieved three exits in the last 12 months, according to unquote" data. The firm sold WFEL to a trade buyer for 2.4x money in May 2012 after growing sales by 70% during the five-year holding period. That same month Dunedin sold Capula to Dutch trade buyer Imtech. The firm reaped 3x money when it sold events business Etc.venues to Growth Capital Partners last November.

Dunedin has a debt-bridging facility that allows it to underwrite the entire capital structure of a deal, something a small number of buyout houses developed since the onset of the crisis in an effort to ensure certainty of funding in an uncertain credit environment. Most recently, the firm utilised this in the Trustmarque deal, with it being repaid through the HSBC refinancing. Dunedin first used its facility with the £23.5m buyout of Rathbone Trust in 2008 (later rebranded Hawksford), just weeks after Lehman's collapse. The firm also used it in courier service CitySprint, with Clydesdale stepping in three months after the late 2010 deal was announced.

Dunedin has more than £400m under management and comprises more than 20 institutional investors across Europe. The firm's investment trust is backed by more than 2,500 institutional and individual shareholders. Dunedin has 16 investment professionals in offices in Edinburgh and London.

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