NorthEdge Capital has closed a new fund focused on the UK lower mid-market on its £120m (€136m) hard cap.

NorthEdge Capital SME Fund I, LP was raised from the firm’s existing investors. It will target businesses across the North of England and the Midlands, investing between £2m-£10m in growth and development capital, management buy-outs, equity release and buy-and-build opportunities.

The fund will sit alongside its flagship fund, NorthEdge Capital II, which closed in 2016 at its hard cap of £300m. It backs in opportunities requiring capital of £10m to £45m and has invested over £150m in 11 companies since its first investment was made in June 2016.

NorthEdge managing partner Grant Berry said there is “immense appetite” for investment across the North and the Midlands.

“We are very pleased to have successfully raised SME Fund I and value the continued support of our existing investors. This Fund reflects our commitment to backing successful regional businesses and builds on our existing heritage whilst giving us much greater flexibility in terms of the businesses we are able to support,” he added.

Houlihan Lokey acted as placement agent for the fundraise.