Aliter raises GBP 134m for new UK support services fund

Aliter Capital II, which was launched in January 2022, is backed by the US and European institutions, including pension funds, funds of funds, university endowments and charitable foundations, according to a press release.

Aliter partner Andrew Busby told Unquote that each LP provided around GBP 10m-GBP 30m in commitments, while the GP's founding partners have also made significant commitments to the fund.

Busby said the fundraising environment has not been easy for new and emerging managers. However, the sponsor's differentiated strategy of supporting buy-and-build plays helped in raising the new fund, he added.

Several factors are contributing to the tough fundraising environment, including the denominator effect and fewer exits leading to less cash available for LPs to re-up, making them more selective, Busby said.

The new fund will deploy tickets of up to GBP 20m and will pursue buy-and-build strategies to create medium-sized companies that can be sold to mid-market sponsors or trade buyers, Busby said.

Aliter plans to deploy the fund in four years, making around seven to 10 deals per year, including bolt-on.

Investments
Fund II will follow the same strategy of its predecessor, targeting medium-sized businesses in the UK support services sector. It will mostly targets owner-managed support services businesses with a B2B model, particularly those that have frameworks and agreements that generate recurring revenues. Sub-sectors the sponsor likes include mechanical engineering, infrastructure, e-learning, and technology platforms, among others, he said. It typically targets businesses with GBP 10m-GBP 50m enterprise value.

Fund II is expected to have a portfolio of five to six platform companies and make up to 35 bolt-on deals, Busby said. It will take advantage of consolidation opportunities by acquiring and integrating smaller businesses into its portfolio companies, as well as pursuing organic growth.

The vehicle has already invested in two platform businesses: Halcyon, a London-headquartered clinical and organisational data collection solutions provider; and Dudley-headquartered recruitment consultancy Concept Resources.

The sponsor is in exclusivity for a bolt-on for Halcyon, which it expects to sign in Q1 2023, while it also has a pipeline of opportunities for Concept Resources which will materialise in H2 2023, Busby said.

Aliter's debut fund, Aliter Capital I, held a final close on GBP 92m in February 2017 and has made 21 transactions since then.

The sponsor sold UK-based North, an integrated technology solutions provider, to Livingbridge in July 2021 in its first exit from Fund I, which has another three companies in its portfolio, Busby said.

People
Aliter Capital – Billy Allan, Greig Brown, Andy Galloway (co-founders); Andrew Busby (partner).

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