Exponent closes second fund on £805m

11 February 2008

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Fund

Exponent Private Equity has closed its second fund with commitments of £805m, doubling the sum raised by its first fund in 2004. Exponent launched the fund at the end of May 2007 targeting £750m. A first close was held in August and by the end of September the fundraising process was almost complete. Exponent reached the final close of Exponent Private Equity Partners II LP (EPEP II) in January. EPEP is structured as a traditional 10-year fund with a five-year investment period and has terms and conditions described as industry standard. The fund had a minimum subscription of £5m. Hugh Richards, founding partner of Exponent Private Equity, explains that the doubling of Exponent's fund size in a four-year period, "is a reflection of Exponent's commitment to the senior end of the mid-market". He says: "This space is defined by where the larger players have vacated." As a result of gravitation up the value chain, Exponent now sees its target enterprise value as £75-350m. Geoffrey Kittredge from Debevoise & Plimpton provided legal advice to the fund, while Helix Associates acted as placement agent.

Investors

Thirty investors committed to EPEP II, up from a total of 19 participants in Exponent's first vehicle. The substantial majority of investors re-upped from the first to the second vehicle. Forty-two percent of investors were US-based, meaning the second fund was slightly more weighted towards the US-investor base than its predecessor. Of the remaining investors in the fund, 29% were from the UK, 22% from continental Europe and 6% from the rest of the world. Funds managed by Pathway, Pantheon Ventures, Danske Private Equity, MassPRIM, OMERS Capital Partners, NYL Capital Partners, Bank of Scotland and US endowment and European private family offices were among the investors.

Investments

EPEP II will follow the strategy of Exponent's first fund focusing on larger, more complex mid-market buyouts of UK-headquartered companies. Exponent is differentiated from its peers in the £75-350m enterprise value range due to its UK-headquartered focus. EPEP II has the ability to take minority stakes, but acquiring controlling stakes is its preferred investment strategy. It can invest up to £200m in any one transaction. Exponent anticipates EPEP making approximately 10 acquisitions.

People

Exponent has an investment team of 12 and expects to make two more hires in the coming year. Richard Campin, Chris Graham, Hugh Richards and Tom Sweet-Escott are the founding partners of Exponent.

Name: Exponent Private Equity Partners II LP

Closed on: £805m

Focus: UK buyouts

Contact: Hugh Richards

Address: Exponent Private Equity LLP, 12 Henrietta Street, London WC2E 8LH, UK

Tel: +44 20 7845 8520

Fax: +44 20 7845 8521

Advisers: Debevoise & Plimpton (Legal); Helix Associates (Placement agent).