Debt manager ESO acquires PE firm – exclusive

ESO Capital Partners is acquiring Core Capital Partners, the UK private equity firm, enabling the combined group to invest across the capital structure.

ESO Capital Partners has agreed to acquire Core Capital Partners for an undisclosed sum, bringing together the two London-based fund managers’ debt and equity finance capabilities.

The combined business will continue the two managers’ previous focus on backing northern European SMEs, investing up to €40 million in complex deals. The combined firm will provide hybrid capital solutions ranging from senior debt to equity.

ESO chief executive officer Alex Schmid will retain his position as CEO of the combined group. Core Capital’s founders, Walid Fakhry and Stephen Edwards, will join the ESO Capital management board along with ESO partners Richard Butler and Christian Fritsch.

ESO and Core Capital have previously worked together on deals including the joint backing of Brasserie Bar Co, the restaurant operator. Between them, the two firms have completed more than 75 deals and raised funds of more than €1.1 billion.

“Core Capital’s expertise in the lower mid-market private equity arena will prove invaluable as we continue to grow and provide bespoke capital solutions to the SME market, which is highly fragmented and underserved,” said Schmid.

ESO was established in 2006 to focus on flexible capital solutions for small complex deals. It has invested almost €700 million in more than 60 deals in the UK, Germany, Netherlands and the Nordics. On 1 March 2018, PDI reported that the firm had deployed around 80 percent of its latest fund, the $250 million European Special Opportunities Fund VI.

Core Capital was founded in 2005 and has raised more than £200 million since then. It has taken minority and majority positions in fast growing UK businesses, backing 16 portfolio company platforms which have completed 40 acquisitions.

It is understood that the integration of the teams is underway and that new investments are being considered by the combined group. Regulatory approvals are being sought to finalise the merger.