The Impact Fund is the inaugural vehicle raised by Palatine targeting a positive social and/or environmental impact alongside industry-standard returns. It represents a continuation of Palatine’s commitment to responsible investing, and builds upon the numerous awards the firm has won for its Environmental, Social and Governance (ESG) credentials.
Beth Houghton (Partner) is leading the Fund. Beth has guided Palatine towards multiple ESG awards since joining the firm in 2007, and won the BVCA’s first "Outstanding Individual Contribution" award for responsible investment in 2016. Beth will lead the team of four investment professionals including Zoe Clements (Partner), who joined Palatine from Electra Partners in October 2016 and brings 12 years’ private equity experience to the team. Tim Farazmand, a veteran of the private equity industry and Chairman of the BVCA’s Impact Investment Committee, is the Fund’s chairman.
The Impact Fund reached its hard-cap in under a year of fundraising and attracted commitments from a diverse group of investors including public pension plans, endowments, consultants, funds of funds and high net worth individuals. Several of Palatine’s existing LPs supported the fundraising as well as a number of new investors. Palatine will be targeting investments up to £10m and expects to build a diversified portfolio of businesses which will include themes such as integrated health, ethical consumerism, lifestyle and wellbeing and the circular economy.
Beth Houghton, Partner of Palatine Impact, said: "The Impact Fund builds on Palatine’s longstanding commitment to responsible investment. We have developed a strong pipeline of companies led by people that share our passion to grow companies that make a difference. The impact team are excited to work alongside these management teams to deliver positive social or environmental impact alongside private equity returns."
Gary Tipper, Managing Partner of Palatine Private Equity, added: "We are delighted to announce the final closing of the Impact Fund and want to thank the LPs who had the vision to support us in what is relatively virgin territory. Our commitment to ESG and our focus on generating market rate returns was key in my view in attracting an impressive LP base for the Fund."
Richard Anthony, CEO of Evercore’s Private Funds Group, said: "We are delighted to have worked with Palatine once again and are thrilled about the success of the Impact fundraise, which is undoubtedly a testament to the calibre of the Palatine team and their track record."
Alexander Rayden, Managing Director of Evercore’s Private Funds Group, commented: "Palatine’s Impact Fund successfully attracted a high quality investor base showing how responsible investment and good returns can co-exist".
Richard Anthony, Alexander Rayden, Meredith Bourne and Christopher Mockford of Evercore Private Funds Group acted as exclusive Global Placement Agent; Kate Downey and Nick Roxburgh of Fried, Frank, Harris, Shriver & Jacobson acted as Legal Advisor to Palatine Private Equity.
This marks the first deal from Palatine’s Impact Fund, an investment vehicle targeting profitable growth companies that can deliver a private equity return, and a positive social or environmental impact.
Established in 2005, the Gatwick and Warrington based business provides a range of electrical courses for individuals who have little or no electrical knowledge who want to become electricians, whilst also providing futher training to those already in the profession or associated trades.
Trade Skills 4U focusses on the adult training market, and attracts people who are looking to upskill or retrain in an environment that is suited to their needs. This includes people who have left the military, and opens up career opportunities that may not have been accessible to individuals prior to completion of the Trade Skills 4U courses.
The deal sees Palatine back the existing management team, consisting of Carl Bennett, Andy Hays-Ellis and Christos Panayiotou. In addition, Robert Vince who has had a long career with Interserve will join the board as Non-Executive Director. The Palatine investment will support the expansion of Trade Skills 4U across the UK with the opening of a number of new training centres.
Carl Bennett, Executive Chairman of Trade Skills 4U, said: "Trade Skills 4U provides exceptional training for adults who are looking to develop their skills in an environment tailored to their needs. The business has grown recently with the opening of a new centre in Warrington in 2016, and with Paltine’s support we are looking forward to increasing our presence across the country and increasing our social impact. Palatine has an exceptional track record of supporting companies like Trade Skills 4U with their expansion plans. We have found a unique partner in Palatine given its enviable track record in responsible investing and the recent close of its Impact fund. They have demonstrated that they share our passion and values that support our distinctive proposition in the electrical training sector, and are fully aligned with us in delivering a positive social impact and supporting our continued growth."
The investment was led by Partners Beth Houghton and Zoe Clements, with support from Matthew Coles, Investment Manager.
Beth Houghton, Head of Impact Fund at Palatine Private Equity, said: "We are delighted to support the management team of Trade Skills 4U with their exciting and impactful expansion plans, and look forward to working with them to build on their success to date and explore a number of growth opportunities.
"Trade Skills 4U typifies the type of company that we are looking to invest in through our new Impact Fund. Namely a growing business with a strong and passionate management team, that looks to make a positive and meaningful social impact."
The Bunker, which delivers mission critical cloud solutions via its ultra-secure data centres, was founded over 20 years ago and operates nationally from sites across the South of England. Palatine plan to use The Bunker as a buy and build platform to create a full service cyber security business. Several acquisitions to achieve this aim have already been identified.
The requirement for UK corporates to have in place higher security for highly sensitive data has seen demand for the Company’s services accelerate in recent years, specifically within the Fintech and wider Financial Services sectors. Current levels of sales activity within the business show this rate of growth will continue with the company set to benefit from market headwinds such as GDPR and an ever greater demand for cyber security services.
The Palatine team comprised of Partner Tony Dickin, Investment Director Andy Strickland and Investment Manager Rupert Brown.
Tony Dickin, Partner at Palatine Private Equity, said: "We look forward to working with the management team of The Bunker and Andy Hague in building on the excellent market position the Company has in the high security managed service sector, as well as developing its position in the wider cyber security space. As part of the value creation plan for the business we will look to deliver a buy and build strategy and we are currently in discussions with a number of parties we believe will provide exciting additional services to The Bunker. We believe the management team have built a fantastic business to date and that there is a currently a significant market opportunity to develop the business further"
Andy Hague, Group CEO, said: "This acquisition signals the first step in what I believe is a very exciting plan that I and the management team at The Bunker have been formulating in close partnership with Palatine in recent months. The Bunker offers truly unique facilities, and can rightly claim to provide the most physically secure Data Centres in the UK. With the wave of regulatory change in the market driving the need for ever increasing data security, we will be looking to build on the facilities in place today to add a full suite of cyber security products and services to the already strong security centric offering. Both the excellent existing management team and myself look forward to building something very special with Palatine acting as a valued and forward looking investor."
Palatine was advised by BDO, Gateley Plc and RSM with due diligence provided by CIL, Marsh and The Berkeley Partnership. Debt facilities were provided by European Capital and Santander.