UK and Ireland lower midmarket investor Hypha Private Equity has held the final close of its maiden fund on around £120m.
The emerging manager exceeded the fund’s £110m hard-cap five months after launching as a firm. It held the fund’s first close on £73m in October this year.

Gap in the market

In contrast to some of the larger-volume investors in the lower midmarket, Hypha aims to make two to three investments per year, with a view to offering entrepreneurs and advisers quicker, decisive transactions.

Hypha intend to make investments of between £3m and £15m for either minority or majority positions in UK and Ireland businesses, particularly focusing on regions often overlooked by traditional PE houses.

The first-time fund will predominantly focus on the buyouts of profitable, founder-owned SMEs across technology, health and advanced manufacturing, though has the flexibility to conduct equity release and growth capital transactions.

With a number of PE houses increasing their fund and deal sizes in recent years, Hypha believes there is a lack of long-term capital for founder-owned businesses in the lower midmarket that want a direct line of communication to the investment committee.

The UK lower-mid market is made up of established, high volume funds, with large portfolios and sizeable teams. Hypha believes there is a gap in the market for teams that want to work with investors who are more focused, have a smaller portfolio, and where they are working directly with the decision makers.

Fast-forward

Hypha was founded by Matthew Evans-Young, Chris Wardle and Matt Pomroy, who all previously worked together at UK investment fund Foresight Group.

The fund is expecting to make its first hires in the new year on both the operational and investment side, with a view to build a nimble and ambitious team.