Beechbrook to close Ireland Fund in Q4, credit fund in 2021

Beechbrook Ireland Fund was registered in March 2018 with a target of €100m and held a first close on €35m in July 2019, though co-founder Paul Shea told Unquote that the firm is no longer working towards that target: "We're talking to several regional investors, and if they all come in we will hit the target, but otherwise we will end up at the lower end of the €50-100m bracket we're looking to close on."

The fund currently has Certior Capital and The Ireland Strategic Investment Fund as anchor investors, each with commitments of €16m, while two large family offices are also invested. Shea expects the fund to have 6-10 LPs at final close. "We cannot raise a much bigger fund than we currently are at the moment because we would have to compromise on quality, terms and pricing for investments. It is important to shape the size of the fund to the size of the opportunity."

The fund has completed two investments and is expecting to close its third investment in early September. It has also received a mandate for a fourth investment, which is likely to close in October 2020. "We have a really busy pipeline following those deals," said Shea. "There's a lot of money in Ireland for venture opportunities and that area is thriving, but for SMEs making €1-5m EBITDA and revenues upwards of €10m, there is a real shortage of available capital."

In addition, Shea told Unquote that the firm held a final close for its Beechbrook UK SME Credit Fund II in December 2019 on £130m. The fund was launched in July 2018 with a higher target, though Shea said the combination of Brexit uncertainty and the Covid-19 outbreak led to a lower outcome. He told Unquote that one investor was willing to commit a further €20-25m, but approval for the allocation was needed on the first day of lockdown in the UK. "The investor was a bit reluctant to see an already well-invested portfolio going into lockdown."

The fund has eight investments to date and is 60% invested. It is likely to make another four or five investments during its investment period.

Beechbrook is also looking to raise its next flagship vehicle, Beechbrook Private Debt IV, with a first close planned for December 2020. The fund will be open to investment during 2021. Its predecessor fund, Beechbrook Private Debt III, is now close to fully invested. Shea said the fund saw a large exit recently and would be investing that recycled capital until October 2020. The fund is expecting to close two further transactions by that date.

While the firm has not yet set a target for the fund, Shea confirmed that it would target more than Beechbrook Private Debt III's final close of €200m. Shea said: "We're likely to split up the next vehicle into a junior sleeve and a senior sleeve. The funds have previously been mezzanine funds and when we go and speak to sponsors, they are often looking for three to four turns of senior debt, and we currently have to turn down many attractive options.

"For this fund, we will use the same strategy, the same origination techniques and the same team, but we will also have the option to invest out of those two strategies."

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Funds
• Debt
• UK / Ireland
• United Kingdom
• Beechbrook Capital