Tenzing raises GBP 100m Belay Fund

The vehicle has the capacity to invest up to around GBP 150m, according to a statement.

The GP took the decision to raise an additional fund to back its existing portfolio, as opposed to raising deal-by-deal co-investment capital, in part due to the speed and deliverability of the capital, Tenzing co-founder and managing partner Guy Gillon told Unquote. "Previously, we have raised co-investment from existing LPs for larger platform investments," he said. "While it's effective, and we have lots of support, it's slower, more distracting and less competitive when it comes to perceived deliverability. This demonstrated that there was strong demand among our existing LP base with several of them keen for us to raise a specific vehicle rather than fund deal-by-deal."

Tenzing is also responding to market demand and competition via its new vehicle. "We are seeing an increase in full equity underwriting on transactions in the market now, which is driving greater funding capacity than previously, and increased competition on speed to complete," Gillon told Unquote. "Both factors have made raising co-investment on a deal-by-deal basis anti-competitive due to the time and risk around each raise."

Tenzing launched the private placement memorandum for the fund on 22 October 2021 and closed the fund on 26 November. Proskauer and Evercore advised on the fundraise.

The fund's name continued the mountaineering symbolism of the firm's name (taken from Tenzing Norgay, the Nepalese mountaineer who guided Sir Edmund Hillary in the first ever ascent of Mount Everest), Gillon told Unquote. "A Belay is a piece of equipment that links two climbers together when ascending larger or steeper sections of a mountain," he said. "We have applied the metaphor to larger equity investments when linking the Belay fund to Fund II."

Tenzing Private Equity II held a final close in June 2020 on GBP 400m. The GP invests in technology and technology-enabled businesses, focusing on the UK, Ireland and northern Europe. Tenzing backs businesses with enterprise values of GBP 10m-200m, making equity investments of GBP 10m-150m, according to a statement.

Tenzing intends to expand its activities in the Nordic countries following the appointment of Magnus Gottås to lead its deal sourcing in the region, with an initial focus on add-on deals, as reported. Tenzing has supported its portfolio with eight add-ons over the past 12 months, according to a statement.

Tenzing's recent activity includes the sale of education sector web filtering and safeguarding platform Smoothwall in a GBP 75.5m trade sale to Australia-based Family Zone in August 2021, generating returns of 5.6x.

Investors
The fund is backed exclusively by the GP's existing LP base, which comprises institutional LPs from the UK, Europe, North America and Asia. "While the programme was not perfectly compatible with all of our LPs, we had interest from more than 70% of our capital base," Gillon told Unquote. "After that, it was about whether we could make the allocations work for everyone on a fair, transparent and consistent basis."

LPs in Tenzing's previous fund include the West Yorkshire Pension Fund, Bregal, Schroders and Unigestion, as well as endowments from the UK and the US, according to Unquote Data.

Investments
The fund is expected to make three or four investments, Gillon told Unquote, although it can be flexible. The fund will primarily be dedicated to follow-on investing for platforms that the GP has invested in within the last year, where it sees more inorganic opportunity than originally thought, Gillon told Unquote. This will include situations such as larger investments and/or secondary buyouts with more limited rollover, he added.

Tenzing currently has a portfolio of 11 companies across Tenzing II and its GBP 200m, 2017-vintage predecessor. Within the past year, the GP has made three platform investments. In January 2021, Tenzing acquired cybersecurity training business MetaCompliance, and audit, tax and business support firm Jeffreys Henry the following month. In October 2021, the GP acquired transport management software developer Mandata.

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

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