Vespa Capital closes third flagship fund on £150m

Launched in November 2019 with a hard-cap of £150m, the fund is domiciled in the UK as a UK LP.

Vespa Capital III's predecessor, Vespa Capital II, closed on £120m in January 2017 and has made all its investments. It is around 90% deployed.

Vespa Capital I, the firm's debut fund, closed on €75m in March 2010 and is now approaching the end of its 10-year life. Vespa Capital managing partner Nigel Hammond said all the investments from Vespa Captial I have been sold at a profit and the gross return of the fund is 3x money.

Vespa Capital III's management fee, carry and hurdle rates are in accordance with market standards.

Simmons & Simmons provided legal advice, while Houlihan Lokey acted as placement agent.

Investors
Hammond said of the fundraise: "For Vespa Capital II, we had conversations with about 100 LPs. This time around, we only engaged with a handful and pretty soon realised that the appetite was strong and so we had to curtail any further discussions."

The fund has 28 LPs: eight institutional investors and 20 individuals. Of the seven institutions that invested in Vespa Capital II, five also made commitments to Vespa Capital III, while three institutional investors were new investors.

LPs in Vespa Capital II included Derbyshire County Council Pension Fund, the European Investment Fund, Hampshire County Council Pension Fund and Veritas Pension Insurance Company, according to Unquote Data.

For institutional investors, Vespa Capital had a minimum commitment size of £1m.

Hammond said almost all the individuals who participated in the fundraise have been managers of businesses that Vespa Capital has previously invested in.

Investments
When asked if the firm's strategy was likely to change during the deployment of Vespa Capital III, Hammond said: "We anticipate the same strategy and believe that a £150m vehicle is the right size for our target market of companies with an enterprise value of £10-40m. For any larger deals, we have enthusiastic and proven co-investment partners."

The fund will write typical equity cheques of £10-30m. Previously, the firm has invested in the UK and France in companies with enterprise values of €15-75m.

Hammond said: "Our objective remains to invest in profitable differentiated businesses with international growth potential and that are likely to be B2B service providers."

The fund has not yet any made investments. Hammond said: "We've seen a really promising start to 2020 in terms of pipeline, but we only plan to do two or three deals a year that exactly fit our criteria, and we will be in no rush to invest."

People
Vespa Capital – Nigel Hammond (managing partner).

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