Connection Capital completes first co-investment with independent sponsor Copper Street Capital

News: Investment News | 10 May 2023

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Connection Capital, the private client alternative investment firm, has completed a £5.6m co-investment into leading regulatory compliance consultancy Thistle Initiatives Group (‘Thistle’) in a deal led by Copper Street Capital (‘Copper Street’).

  • £5.6m invested in unlevered £23m MBO of compliance consultancy Thistle Initiatives

Copper Street is a well-capitalised independent sponsor and operates a private equity buyout and growth strategy, with a focus on European financial and business services. It underwrote the Thistle deal, acquiring a majority stake, in October 2022. This was its fifth investment under this strategy. The stake has been syndicated at cost to Connection Capital clients.

The investment will support the long-term growth of Thistle with an aim to more than double in size over the next three years through organic growth and acquisition. Thistle is well-placed to become a leader in its market, due to expertise in key areas affected by structural tailwinds in its sector, such as consolidation, the growth of fintech and an increased focus on financial crime and regulatory changes.

Peter Knight, Head of Co-investments at Connection Capital, said: “This is a great example of how we provide capital solutions to private equity managers, helping them to achieve greater flexibility.”

“Connection Capital’s experience and expertise as a General Partner in our own direct private equity transactions and as a Limited Partner to dozens of private equity and alternative investment funds means we are both well placed to source co-investment opportunities for our clients and to underwrite single asset transactions through our own direct investment expertise. This means we are typically able to engage with private equity sponsors who have opted to operate a deal-by-deal funding model.”

Jerry del Missier, Founder and CIO at Copper Street, said: “We are delighted to partner with Connection Capital on this deal. It provides mutual benefits and we look forward to continuing the relationship over the coming months and years."

Global fundraising backdrop creates conditions for co-investment
It is no coincidence that the amount of independent sponsors coming to the market and the volume of capital committed to co-investments is on the rise. The private equity fundraising environment is tough right now and many experienced emerging managers are attracted by a deal-by-deal model. According to S&P Global, the global private equity market launched just 481 funds in 2022, less than one-third of the 1,464 funds that set sail in 2021, a year of record private equity performance.

Fund launches in 2022 were also well below the marks set in 2020 and 2019. Institutional investors impacted by the denominator effect have sought to reduce allocations to private equity and many have pulled up the drawbridge for first time funds, preferring to allocate to the most well-known private equity brands. Regular experienced co-investors can be hard to find - Connection Capital recognises this as a growth opportunity for the firm and as a result has invested significant resources in its co-invest capabilities.

About Connection Capital
Connection Capital LLP is a specialist syndicator of investment funds from private professional investors into direct private equity, private debt and commercial property deals, as well as alternative asset funds. It currently has some £480 million under management across a diverse portfolio. Connection Capital provides a specialist managed service to help professional clients build up their own alternative asset portfolios. Private investors self-select which opportunities they want to take a stake in. Opportunities are identified and negotiated by Connection Capital, which also carries out all due diligence and manages the investment from completion through to exit, on its clients’ behalf. Connection Capital is authorised and regulated by the Financial Conduct Authority.