This fortunate firm is benefiting from two booms at once: fund raising and buyouts. Fund raising was up 31% in Q1 2006 compared with Q4 2005, according to research conducted by Thomson Financial in conjunction with the EVCA. Investments into private equity in Q2 2006 seem to be continuing on the upward trajectory.
Gresham, the UK-based management buyout (MBO) specialist, raised £340m in record time last month for its Gresham Four fund, which was oversubscribed at hard cap. Gresham invests in UK mid-market management buyouts up to £100m across a variety of sectors and its strategy is appealing to investors including Access Capital, AlpInvest, ATP Private Equity Partners, Morley Fund Management and Standard Life Investments.
The UK buyout market saw its best performance so far during Q2 2006, with the value of deals breaking the £10bn mark for the first time, according to KPMG’s Private Equity Group, so it is no surprise that investors are interested in these strategies.
Gresham Four also focuses exclusively on mid-sized UK companies, which have outperformed larger counterparts, again, in Q1 2006. But with medium-sized stock prices at multi-year highs, any MBOs that involve share buy-backs will be expensive for the firm.
Despite the significant upturn in inflows into private equity in 2006, highlighted by firms like Gresham, the figures are still nowhere near the four-year highs reached in the spring of 2005 but they are definitely moving in the right direction. So here’s hoping.