Bridgepoint has lifted the lift on its performance during the first half of 2023, revealing its performance in credit, its progress on the fundraising trail and a pipeline of exits.
The FTSE 250 private equity firm, which floated in London in the summer of 2021, also shared its market outlook, forecasting more deals in the months ahead after a quiet spell of M&A activity.
Amid intense competition among PE firms to secure more capital from their investors, Bridgepoint said that it is in the process of raising several funds.
Its latest middle-market buyout fund, Bridgepoint Europe VII, currently has commitments of €6bn of its €7bn target. The group said it will accept new investors until Q1 2024 to allow investors to use both 2023 and 2024 allocations.
Bridgepoint added that the fundraising effort is now “well on the way to completion”, having tapped investors for a further €500m over the last quarter. It has also now exceeded its predecessor fund in size.
Its third direct lending fund and associated separately managed accounts (“SMAs”) held a final close in the first half of 2023 with investable capital of over €3.4bn.
Bridgepoint Credit Opportunities IV and Bridgepoint Growth II will close within the next 12 months, the group added.
In the next 12 months, the company also expects to launch its fifth fund for its lower mid-cap investment strategy, Bridgepoint Development Capital (BDC V), and its fourth direct lending fund (BDL IV).
In the fast-growing world of private credit, Bridgepoint focuses on the middle market, offering first lien, secured, uni-tranche, floating rate credits.
Its direct lending and credit opportunities strategies have deployed around €1.7bn of capital over the last 12 months.
The company said it typically supports European financial sponsors to make acquisitions in their private equity strategies, often acting as the sole lender.
“While our most recent fund, BDL III, was targeting 7 to 9 per cent unlevered returns when launched, thanks to the increase in base rates since the beginning of last year, it is currently realising unlevered returns in low double digits with no realised losses in the strategy since inception,” Bridgepoint said.
3. Market outlook
Chairman William Jackson also shared his outlook for the months ahead, striking an upbeat tone after a quiet period of dealmaking.
“Market conditions in H1 2023 saw extended transaction timelines with exits, fundraising and new investments all taking longer to complete as parties undertake robust and detailed diligence.
“As we move into H2, we are already seeing activity increase in the M&A market.”
Jackson added: “Looking forward, we expect market volatility and inflation pressures to continue in the near term and have positioned our investment activity accordingly.”
Roughly €4bn of capital is targeted in exits over the next 18 months. The company currently expects targeted exits for 2023 will be delivered in the second half of the year, although it said that some of these exits may move into the 2024 financial year in current market conditions.
Jackson added: “The outlook for portfolio exits presents both challenges and opportunities. The macro environment is complex and buyers are more cautious but the expectation gap between buyers and sellers is narrowing.
“Selling assets today remains more challenging than in previous periods, but the value of growth remains at a premium in the current market. Safe strategic assets remain highly sought after. Embedded and portable leverage, where available, is also highly attractive to buyers.”
Jackson said its recent exit of DMC, a designer and manufacturer of connector technology systems for high-voltage power infrastructure, delivered a money multiple of 21.7 times EBITDA.
4. Financial performance
In H1 2023, assets under management hit €39.5bn, rising by 6.5% compared to H1 2022 and up 48% since IPO, when AUM was €26.6bn.
Fee paying assets under management reached €24.6bn, a 24% increase from H1 2022.
Meanwhile, profit before tax rose 10% year-on-year to £53.1m
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