Bridgepoint, the European buyout firm and owner of Pret A Manger in the UK, has raised €4bn for its latest fund in another sign of the wave of cash rushing into private equity.
The fundraising, Bridgepoint’s first since a €4.8bn vehicle in 2008, has taken less than a year to reach a “hard cap” beyond its original €3.5bn target.
Institutional investors have been putting more money into private equity as they look to reinvest record levels of cash being returned by their existing fund investments.
Low interest rates and high valuations in public markets have made it easier for firms to sell or list companies, and to mark up the value of holdings.
Bridgepoint made more than two and a half times its original investment when it sold Swiss sports rights company Infront to Dalian Wanda of China for more than €1bn this year.
Low interest rates have also made pension funds, sovereign wealth funds and endowments wary of keeping cash on their books for too long.
Bridgepoint said its new fund “has benefited from significant recommitment of existing investors” who increased their contributions by more than 25 per cent on average.
The new fund, which will continue Bridgepoint’s strategy of investing in mid-market European companies valued at more than €200m, has already made its first investment by buying the ASK and Zizzi Italian restaurants in the UK.
Bridgepoint is also investing to expand Pret abroad, including in the US and China. It acquired the sandwich chain in 2008.
Traditional buyout funds are pools of money invested by private equity firms on behalf of “limited partners”, who lock up capital for years in the hope of high double-digit returns.
Firms are looking to raise more than €80bn for European buyout funds at present, according to Bloomberg data. More than half of the fundraising was announced in the past year, with €28bn of it in the past six months.
The French firm PAI Partners recently exceeded its target when raising €3.3bn for its latest fund, in a comeback from an internal management “coup” which clouded its last fundraising in 2008.
Despite the cash flowing into private equity, relatively few deals are being done amid fears of high prices driving down future returns.
As of the middle of March there have only been €20bn in private equity takeovers so far this year, according to Palico, a data provider. That is the lowest level since 2002 — when the industry was a third of its current size.