August Equity's fourth fund holds £224m final close

The total raised, marginally below the £225m target, is £24m higher than the amount raised by August for its third vehicle, which closed in December 2013. The GP's third fund was fully deployed across 10 investments by the end of 2016.

The GP's managing partner Philip Rattle told unquote" the Brexit vote was very much a topic of discussion during the fundraising process. "Brexit consumed about two and a half months of the fundraising process," he said. However, he added: "Our second biggest commitment was made just two weeks after the Brexit vote from a Swiss investor."

August said the fund's size reinforced its commitment to the UK lower-mid-market, with the GP resisting the temptation to raise larger amounts off the back of a strong track record and ever-increasing demand for quality funds. The fund's hard-cap was set at £250m.

"The upper mid-market in the UK is very congested at the moment with lots of players, capital, and intermediated processes," Rattle told unquote". "The lower mid-market remains very attractive to us for a number of reasons: we can source and create our own deals; work on deals in our own way rather than taking part in processes; the pricing is good and, ultimately, it's in our DNA – it's what we're good at and what we enjoy doing."

Amala Partners acted as placement agent for the new vehicle, which has a vanilla fee structure, Rattle told unquote".

Investors
The fund received commitments from 20 LPs, of which half were new investors. Its predecessor, August Equity Partners III, received commitments from 13 investors. The GP said it was looking to diversify its LP base, both in terms of geographic origin and investor type.

"We have more capital from European family offices in this fund, we have an additional US investor, our first Canadian investor and two new Scandinavian investors," Rattle told unquote".

For a full list of LPs invested in August Equity Partners IV, and their individual commitments, click here to check out the fund's profile on unquote" data.

Investments
The new vehicle will look to make 10 primary investments over a period of three and a half years, in addition to bolt-on acquisitions for portfolio companies. Another August spokesperson told unquote" the firm is in exclusivity over the first investment for the fund.

The new vehicle will write equity cheques of £20-25m for UK businesses generating up to £5m of EBITDA. The investment thesis will remain consistent with the GP's historical approach, implementing both organic and acquisitive growth strategies. It will look to build companies that generate around £15m of EBITDA and are attractive to potential trade buyers, though the firm will also sell via alternative exit routes.

August Equity Partners IV will invest in a number of sectors, including technology, business services, healthcare – particularly animal health – and education. The GP has historically made a number of consolidation plays, sourcing managers and launching new buy-and-build platforms such as VetPartners and Funeral Services Partnership (FSP).

In May 2016, the GP sold FSP, which made more than 100 bolt-ons over the course of a six-and-a-half-year holding period, to Montagu Private Equity for an undisclosed sum. When August held a first close for its latest fund, a source close to the situation told unquote" the sale of FSP pushed its third fund's distributed to paid in (DPI) to 50%.

People
August Equity – Philip Rattle (managing partner).

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