Former owner raises a new £205m investment fund as UK's lower mid market defies the Brexit gloom

Lucy White
Winter Sun Breaks Through the Clouds Over Westminster
The value and number of lower mid market deals in the first half of 2017 was similar to previous periods (Source: Getty)

The former owner of online travel agent, Growth Capital Partners (GCP), has closed its latest private equity fund above target as data shows the UK's lower mid market is booming.

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GCP received £40m from the British Business Bank, bringing its total for the fourth fund up to £205m to invest in entrepreneurial small companies.

The announcement comes as new data reveals private equity buyouts in the lower mid market are defying expectations, with the value and number of deals in the first half of 2017 similar to previous periods.

“The 2017 first-half results are a further testament to the deep pool of entrepreneurial talent we have in the UK,” said Andrew Aylwin, partner at private equity firm Lyceum Capital which conducted the research along with Cass Business School.

“The determination and vision of the business leaders who provide outstanding products and services continues to be the driving force of the UK economy.”

The number and aggregate size of UK lower mid market private equity deals by quarter

The fact that lower mid market deal flow and value remained relatively steady in the second quarter was especially encouraging, since data released last month showed buyouts across all sizes slumped from April to June.

Of the 42 UK lower mid market deals which took place in the first six months of 2017, around half were in the business support services sector.

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“Perhaps the most interesting pattern to emerge from the data is the increasing number of investment hubs we are seeing throughout the UK – across the capital, north west, south east and Midlands,” said Scott Moeller, director of the M&A Research Centre at Cass Business School.

Eight deals completed in each of the north west, Midlands and London, while the south east took seven.

Investors in GCP's fund seemed convinced of the lower mid-market strategy, as 80 per cent of investors from its previous fund recommitted and six new names joined.

And it wasn't just UK institutions taking a punt on the country's lower mid market, as European and US investors also cashed in.

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