First Close: Autumn 2018
The Hamilton Gold Fund is designed to tap into the potential in established and profitable companies that are at a transformational point in their lifecycle. This is a £100 million Fund, with an initial £25m focusseed on the North East of England, which already has a cornerstone investment from Hamilton Capital Partners and is seeking further investment as well as securing fixed interest loan facilities.
The Fund will make mezzanine loans to un-listed Small and Medium Enterprises (SMEs) in the North East of England. The type of businesses targeted by the Fund will have demonstrable strong revenues, cash generation and client bases with the potential to utilise capital rapidly for growth, whether that is via increased production or expansion into new markets.
The Fund will also target businesses requiring capital for management buy-ins and buy-outs as well as buy-and-build strategies, general acquisitions and expansion aspirations.
There is a real demand for mezzanine debt instruments into Northern businesses which can provide our investors both regular cash flow from both interest payments and profit participation plus longer term equity style returns from warrants and options within the mezzanine instruments.
This funding gap in the North has created investment opportunities at realistic valuations in the North of England. The Fund is targeting returns of 15% with potential of 30% with the equity options excercised.
Size of Fund: £100m (325m for the North East of England)
Cornerstone Investor: Hamilton Capital Partners LLP
Type of Fund: Mezzanine debt fund Legal Structure: Limited Partnership LP Life of Fund: 10–year closed ended
Base case Return: 15% with 30% equity options fully exercisesd
Fund Management: Rivers Capital Partners Ltd
Investment Strategy: Hybrid of debt and mezzanine debt targeting growth businesses with transformational models including MBO & acquisition
Investment Phase: Years 1-5, holding period 1-3 years
Amounts Invested: Up to £3m in individual investments
Geography: North of England (Focus on the North East)
Sector: Generalist fund including: IT, Telecoms, Aerospace, Defence, Engineering, Manufacturing, Energy and Property
Deal Stages: Growth capital, MBO/MBI, acquisition
Investment Profile: 10–20 individual businesses over 5 year period
Investment Returns: Biannual from year 3
Investor Charges: 1.5% management fees from investor capital
Company Charges: Investee companies charged deal fees and monitoring fees (on cash invested). All company charges to be returned to Fund
Carried Interest: 25% carried interest share to the Fund Manager on exceeding the hurdle rate of 10%