Ordinary Units will acquire an interest in the Underlying Fund, which has exposure to US Small-Cap companies. The Underlying Fund will benefit from Branford’s operational capability in delivering for investors through equity and preferred equity positions. Branford’s Small-Cap investment strategy is focused on finding companies with under USD 100m in enterprise value and whose product or service lines typically have less than USD 200m in total industry sales. Many private equity firms overlook the types of Small-Cap companies that Branford invests in, leaving significant actionable opportunities for Branford which often can be purchased for around 6.0x EBITDA or lower.

Branford aims to have the Underlying Fund achieve Gross Returns of 4.0x MOIC with a 40% IRR. These returns are commensurate with Branford’s historical returns. Branford’s Fund I, a USD 116.9m fund that closed in October 2016, as at December 2019 has a Gross MOIC of 2.3x with a 58% IRR (1.6x Net with a 26% IRR). Prior to Fund I, under Branford’s leadership from 2002 to 2016, Branford was able to generate Gross Returns of between 3.5-5.5x MOIC with close to 60% IRRs (2.8x Net, with greater than 45% IRRs). These returns were generated on a deal-by-deal basis beginning with transactions in 2004, with the period being referred to as Branford’s “Pre-Fund” period. To date, Branford has acquired 12 companies (8 platform, 4 bolt-ons) and has now completed its platform investments with Fund I. Given the advanced status of Fund I, Branford is now raising Fund II to continue building on its historical achievements and opportunities in the Small-Cap market. Fund II is seeking aggregate capital commitments of at least USD 250m. Fund II is targeting 10-15 platform businesses, with additional bolt-on investments. Given Branford’s investment pace for Fund I as at December 2019, Branford believes it is already on an investment run-rate of USD 250-350m during a five-year investment period.