August holds first close for fourth fund

Alice Murray
20 May 2016

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Having closed its third fund on ТЃ200m in December 2013, August Equity has been back on the road and is understood to have reached a first close for its fourth vehicle. Alice Murray reports

With August Equity's Fund III nearing full deployment, it is understood the GP has been speaking with investors regarding its fourth vehicle, which is thought to be targeting £225m. The target highlights August's commitment to the UK lower-mid-market, resisting the temptation to raise larger amounts off the back of a strong track record and ever-increasing demand for quality funds.

According to a source close to the situation, the new fund has already reached a first close at 65% of its target, with a further investor set to commit to the vehicle shortly, which will bring it up to 75% raised.

It is understood August has predominantly been speaking to existing LPs, which have already shown strong support. However, following its recent sale of Funeral Services Partnership (FSP) to Montagu Partners last week, which is thought to have pushed its third fund's DPI (distributed to paid in) to 50%, the GP has attracted strong interest from potential new investors as well.

Indeed, the FSP transaction saw August investing £30m to back the company's growth strategy, which resulted in 107 bolt-on deals. Furthermore, the GP stated it drove efficiency improvements by centralising key operational activities, while allowing the group's individual branches to maintain their local brands, teams and thus identities. Click here to read our in-depth analysis of the deal.

It is believed the GP is expecting to receive commitments from a number of funds-of-funds over the summer, which could see Fund IV reach a final close over the coming months.

Despite having closed its last fund in late December 2013, and it being almost fully invested, the source added that August has been measured in its deployment pace, and is unlikely to start investing from its new fund until the end of this year. The third fund has two deals in the pipeline expected to complete over the coming months. Following these two transactions, the fund will be fully invested.