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The private equity backer of a cafe chain called Eat, Lyceum Capital, is letting go of its investment team after its failure to raise a new fund.
The 19-year-old company is one of the oldest buyout houses in the United Kingdom. It was targeting between £375m to £400m for the company’s fourth fund.
However, after its failure to receive enough commitments from various investors, Lyceum called time and announced that it would opt for a deal-by-deal investing model.
Sources who are close to the company said that the flop was down to a “significant number” of earlier investors who are deciding not to return for the company’s next fund, for reasons that are “unrelated to Lyceum.”
However, one industry source informed reported that even though there are significant sums of capital seeking places in private equity funds, investors are still watching out for stand-out performance. The seven exits that were made by Lyceum from the company’s second fund have produced a decent return of 2.6 times money invested.
Added to that, various investors have stated that the United Kingdom has become a less attractive venue for private equity since the vote for Brexit.
The newly restructured company will be led by Jeremy Hand, its former managing partner, and Simon Hitchcock, a deal origination expert.
A source who is close to Lyceum stated that the company was involved in legal consultation as it aimed to slim its team through redundancies.
However, it aims to keep investing and concentrating on technology and tech-enabled services firms.
The company may now look at bigger opportunities than it could when investing via a traditional closed-end fund, including deals that are outside the United Kingdom, those which are bigger or smaller than its usual ticket size, deals which involve the company taking a minority stake and longer term “patient capital” investments.
The previous fund of Lyceum invested in 11 companies, which together, employ about 2,200 staff and generate revenues of over £300m.
None of these businesses have been sold yet. However, Lyceum plans to start realising the investments towards the end of 2018.