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GPs should prepare for extensive due diligence

Competition for LP money may run higher today than ever before but even Isis Equity Partners, the proud manager of a new and hugely oversubscribed £360m fund, has seen a shift.

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Competition for LP money may run higher today than ever before but even Isis Equity Partners, the proud manager of a new and hugely oversubscribed £360m (€448m) fund, has seen a shift. 

According to Isis managing partner Wol Kolade, investors have become far more fastidious since his firm last raised in 2007. 

“Everyone produced a door-stopping tome of due diligence, as opposed to relying on one or two of the leading guys to do the work. The level of reference calling was extraordinary,” he said. 

The background checking included probing past portfolio companies, something the lower mid-market private equity firm has never seen in previous funds. 

Ultimately though, this level of diligence helped Isis reach £360m after only dispatching PPMs are the beginning of the year as LPs “all reached the same conclusion at roughly the same time”.

Kolade believes that fundraising is now a global competition, LPs looking for the best returns regardless of predetermined geographical allocations. 

“It's much more nuanced than that nowadays, You're competing in the lower mid-market globally. LPs are going where the best returns are and to people who they perceive to be in the best position to make those returns on a global benchmark. 

Isis V, which closed to investors last month, picked up £360m and was around three times oversubscribed, according to a fellow UK GP. The firm last raised £238.5m in 2007.