Irish private equity firm Erisbeg raises €75m to target SMEs

Dublin-based private equity firm Erisbeg, co-founded by a former Blackstone executive Alan Kerr, has raised an initial €75 million from European investors for its first fund targeting investments in Irish small- to medium-sized businesses (SMEs).

It is expected that the ultimate size of the fund, Erisbeg I LP, may reach €100 million.

Erisbeg was set up in 2017 by Mr Kerr and Thomas Davy, who previously headed up FTSE 100 component DCC's environmental business before its sale the same year in a deal worth £219 million (€252 million).

Since launch in 2017, Erisbeg has taken majority stakes in Medray, a health equipment distribution business, BP Multipage, a communications firm which operates in the health sector, and Food Safety Company, a food safety consultancy, for undisclosed sums. These deals were initially funded by the firm's partners and advisers but will now be rolled into the new fund as what are known as "seed assets".

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The fund will Erisbeg will target small-cap companies with operating earnings typically in excess of €1 million, according to the firm. Individual investments will be in the range of €5 million to €20 million with potential for follow on money to support growth or acquisitions.

“We are very enthusiastic about the potential in the Irish SME sector. There are very solid and well managed businesses with real potential who we believe can grow significantly in the coming years,” said Mr Kerr, who joined Blackstone’s debt investment business, GSO, in January 2012 under the sale of Harbourmaster Capital Management, which he had co-founded in Dublin in 2001. He left Blackstone in early 2017.

Niche sectors

“We are looking for companies in niche sectors which require additional finance to realise their potential,” Mr Kerr said. “We help business owners by providing solutions to issues like succession and by supporting organic and acquisition growth.”

Eirsbeg is among a number of private equity firms that have set up in the Republic in the past decade to invest in SMEs.

These include MML Capital Ireland, an arm of Cardinal Capital, and Melior Equity Partners. The teams behind Cardinal Capital and Melior were previously involved in the €290 million Cardinal Carlyle Ireland fund that was set up in 2013 and went on to buy and sell controlling stakes in companies and AA Ireland, Lily O'Brien's, Payzone and Carroll Cuisine.

However, Erisbeg is seeking to invest in smaller firms. While another firm, Business Growth Fund (BGF), is also targeting small SMEs, its interest lies in taking minority stakes, rather than controlling positions.