(Bloomberg) — European mid-market private equity firm Equistone has paused raising money for its flagship fund and is exploring alternative formats after failing to reach its initial goal of around €2.5 billion ($2.6 billion), people with knowledge of the matter said.
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Equistone recently told investors it’s temporarily pausing fundraising efforts for Fund VII, the people said, asking not to be identified because the information is private. It’s in exploratory discussions about raising money in different ways, which could include strategies more narrowly focused on particular sectors or geographies, the people said.
The fresh methods being explored could take the shape of new sub-funds, or could see capital deployed from the flagship fund, the people said.
Equistone is also halting new investments in German-speaking countries given its capital constraints and will focus solely on its existing portfolio, the people said. After the departure of some investment professionals in the so-called DACH region, as well as consolidation of back-office teams, Equistone’s total headcount has fallen to around 50 in recent months, down from a peak of 70-odd staff, according to the people.
The firm had been pitching the new flagship fund to investors since late 2022. Its sixth flagship fund amassed €2.8 billion in 2018.
Fundraising for midsized buyout firms has become increasingly fraught, with many investors flocking to either large asset managers that offer a range of strategies, or specialist firms focused on niche strategies. Some major investors are doubling down on their relationships with top performers and cutting the number of private equity firms they give money to as they seek to mitigate a slowdown in returns.
Equistone pursues buyouts of companies valued at €50 million and €500 million including debt, according to its website. It currently has 36 companies across its portfolio including candle maker Gala Group, business vehicle rental firm Nexus and experience gifts seller Virgin Experience Days.
A representative for Equistone declined to comment.
Equistone will continue investing the money it’s already raised for Fund VII, and has recently been making bolt-on acquisitions for existing portfolio companies. Last week, Equistone-backed claims services firm QuestGates announced it’s buying motor industry claims firms Brownsword and forensic accounting provider Toppings.
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