Elysian III holds first close on £270m

Domiciled in the UK as a UK limited partnership, the fund has a target of £300m.

A source close to the situation told Unquote that the firm expects the fund to reach a final close in a couple of months. Elysian III is not significantly larger than its predecessors as the firm wanted to continue investing in its niche and did not want to move into a larger deal bracket size, as Unquote previously reported.

The source told Unquote that most of the due diligence meetings regarding the fund were held over Zoom and Teams. The source said the firm found investors either shut up shop entirely to review Q1 and Q2 valuations, or were very responsive, depending on whether Elysian had been cultivating a relationship for some time.

The firm's second-generation fund closed on £250m in July 2015 and was 72% deployed as of December 2019. Its investment period ended this June.

The firm's debut fund is currently in its realisation phase, having made six exits to date. The most recent are the sale of Wellbeing Software Group to trade buyer The Citadel Group for a return of 4.5x money and the flotation of Pebble Group in December 2019, which returned 3.2x money to Elysian investors.

When discussing the progress of this fundraise, the source said: "With Covid-19, additional concerns included a big focus on how the firm generated value even in a recessionary environment. Brexit has largely receded as a question and the focus is now on buying well, not over-gearing, and working with management to make companies more efficient."

The fund has management, carry and hurdle rates in accordance with market standards, including a 2% management fee and a 20% carry rate.

Capstone has the mandate as placement agent, having advised on the firm's two predecessor funds.

Investors
The fund has more than 20 LPs, mainly from Europe and North America. While the firm did speak with some Asian LPs, it decided to focus on the more responsive investors in Europe and North America, according to the source.

The GP commitment to the fund was £26m or 8.6% of the target.

LPs in Elysian II included Hamilton Lane, Morgan Stanley, West Yorkshire Pension Fund and Argentum.

The source said that without Covid-19 the fund could have reached the hard-cap by June 2020, but several investors who would have come in earlier wanted to wait until they saw progress. Those investors are now coming into the fundraise.

Investments
Elysian III will look to invest £20-40m in UK lower-mid-market companies. The firm has an expected holding period of three to five years.

The source said the firm is looking at platform investments for this fund and bolt-ons for Elysian Capital II, expecting to do a deal during Q4 at the latest.

People
Elysian Capital – Ken Terry (CEO).

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