Tenzing closes second fund on £400m

The fund had a target of £350m with a hard-cap of £400m and was raised in nine weeks, according to a statement.

“We were initially expecting to go to market in Q2 or Q3, as we expected to make one or two more deals from Fund I,” Tenzing managing partner Guy Gillon told Unquote. “As the coronavirus crisis hit, we wanted to look at the existing portfolio companies and we decided we may only have dry powder for one more deal so the right time to go to market was earlier than we initially thought.”

“Our investors were very supportive about the firm and unanimously felt it was the right time to go to market. That gave us the conviction to launch.”

In addition to the fundraise, Charlie Taylor has recently joined the firm as marketing director and John Messer and Milan Kellner have been appointed as investment leads.

The fund’s predecessor, Tenzing Private Equity I, closed on £200m in January 2017. The firm had an initial target of £150m but reached its hard-cap, according to a statement.

The firm has only realised one asset to date. The investment in FMP Global, which was backed by Access Capital Partners, preceded the launch of Tenzing’s first fund.

Gillon said: “We were initially contemplating some exits this summer and have had a lot of inbound interest, especially from PE-backed trade. However, in the current environment, I expect it will take six months to a year for those companies to rebound enough for that interest to become real again. We’re not in a rush to sell and are happy to be patient capital.”

The fund has management, carry and hurdle rates in accordance with market standards.

Evercore Private Funds Group acted as the placement agent and Proskauer Rose provided legal advice.

Investors
In total, the fund had around 30-35 investors, 15 of which came from a pool of 18 existing investors. “The three existing investors that didn’t come into the fund had their own internal considerations and were supportive, but not within the time frame we were looking at,” said Gillon.

LPs in the fund’s predecessor include Schroder Adveq, Ohio State University, University of California Berkley Foundation and Bregal, which contributed the largest tickets of up to £30m.

“We’ve got a nice mixture of different types of capital in the fund and it's pretty evenly balanced between endowments, pension funds, foundations, family offices, asset managers and private banks,” said Gillon.

Almost 50% of the LPs are from the US, while the rest are evenly split between the UK and Europe, save one investor from Asia.

Gillon said: “When it comes to commitment sizes, we tried to strike a balance between being sympathetic to the current market, while being pragmatic about running an efficient client services program. Client concentration was also a focus for us."

Gillon told Unquote Tenzing’s GP commitment was market standard.

Investments
The fund will focus on fast-growing technology businesses and technology-enabled businesses based in the UK, Ireland and northern Europe.

“We expect to have around 10-12 investments in the fund, up from the nine we expect to make in fund I,” said Gillon. Fund I currently holds stakes in eight companies.

The equity tickets for the fund will be around £20-25m. “Part of why the fund is larger is because we plan to provide more follow-on capital to the companies, so we’re expecting to make a total investment of £30m per portfolio company.”

Regarding upcoming investments, the firm expects to make one more investment in Tenzing Private Equity I. “Dealflow is quite good right now,” said Gillon. “We have two or three businesses we’re looking at, but we don’t expect anything to close in the next few weeks. We plan to be active in Q3.”

People
Tenzing Private Equity – Guy Gillon (founder, co-managing partner).

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