Endless holds GBP 100m final close for third SME Fund

Wahida Ahmed
30 June 2022

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UK-based sponsor Endless has held a final close on GBP 100m for Enact III, its third fund targeting UK-based SMEs.

Legal advice was provided by MJ Hudson.

The fundraising was run internally by the head of investor relations, Lucia Villamor, working alongside general counsel Simon Hardcastle and finance director Chris Lewis.

Chris Cormack, a partner at Enact, told Unquote that the vehicle held a series of closes over the course of the fundraise, including an oversubscribed first close that attracted the majority of investors. The fund was left open for some of the legacy investors, he added.

According to the press release, the sponsor raised the hard-cap of the fund from its initial volume of GBP 75m.

The fund's predecessor vehicle held a final close in June 2019 on GBP 30m, according to Unquote Data. It has invested in eight UK-based businesses to date, including Edbro, a hydraulic cylinder manufacturer, in May 2021; Bartoline, manufacturer of decorating sundries, in March 2021; Evolutions, a provider of post-production television services, in January 2021; and Realise (formerly known as Interserve), an apprenticeship training provider, in October 2020.

Enact II exited telecommunications network service provider Redhall Networks to a trade buyer in Q1 2021, generating a 4x return.

Enact III will start investing in H2 2022 once Fund II has made its last platform investment, said Cormack.

The sponsor has offices in Leeds, Manchester and London and raised eight funds and acquired over 90 businesses, according to the press release.

The GPs fifth flagship fund, Endless V, held a final close on GBP 400m. The fund follows the same strategies as its predecessor funds, targeting UK-based companies, according to Unquote Data. Endless V can provide equity cheques larger than GBP 10m, whereas Enact provides up to GBP 10m, according to Cormack.

Investors
The LP base comprises advisers, entrepreneurs, and – for the first time – institutional investors. All of Enact II's LPs re-upped for Enact III and the fund has also attracted new investors. The Endless and Enact teams are the single largest investor in Enact III, as is the case with all the sponsor's funds.

Investments
Enact III will target companies operating in the UK lower mid-market that are in challenging situations and do not meet the investment criteria of traditional private equity or bank funding. The sponsor will support the growth of these businesseses and provide operational expertise. The vehicle will deploy equity tickets of up to GBP 10m, a GBP 5m increase from its predecessor, according to a press release.

Cormack told Unquote that the vehicle will typically hold companies for three to five years and target businesses generating GBP 10m-50m turnover with scope for bigger companies, said Cormack.

Much like its predecessor, Enact III will focus on various transaction types and circumstances, including financial and operational restructurings, turnarounds, disposal of non-core assets, carve outs and challenging buyouts.

People
Endless – Chris Cormack (partner); Lucia Villamor (head of investor relations); Simon Hardcastle (general counsel); Chris Lewis (finance director).

[Editor's note: Subsequent to publication, the sixth paragraph has been amended to clarify that Enact II exited Redhall Networks and not Endless II as previously stated.]