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MML plots new fund of €125m-plus to back SMEs

AIB and Enterprise Ireland invested in initial fund and are expected to be approached again


Billy Kane, the former chief executive of Irish Permanent. Picture: Justin Farrelly

Billy Kane, the former chief executive of Irish Permanent. Picture: Justin Farrelly

Billy Kane, the former chief executive of Irish Permanent. Picture: Justin Farrelly

Irish private equity investor MML Growth Capital Partners is looking to raise a new fund, with a target to raise €125m or more.

The move will provide a fresh pot of money for Irish SMEs as non-bank finance becomes more prevalent here.

MML, which declined to comment, typically invests in established, profitable SMEs on the island of Ireland. It is led by Neil McGowan and Rory Quirke.

Individual commitments to companies tend to range from €5-€15m, and can be for minority or majority stakes.

It established a first fund a number of years ago, which it has used to invest in businesses ranging from courier firm Fastway Couriers, to bathroom products supplier Sonas Bathrooms.

Last year it exited investments in refrigeration business Lowe Refrigeration, and specialist engineers H&MV. MML has filed documents at the Companies Registration Office for an entity called 'MML Growth Capital Partners Ireland II'.

The investors in the first MML fund were AIB, Enterprise Ireland, Goldpoint Partners (an investment arm of US insurance company New York Life), the European Investment Fund and the American health services giant Cigna Corporation.

That same cohort is likely to be approached again about investing in the new fund, with a second phase of fundraising with opportunities for new investors potentially to follow. A range of non-bank finance providers has sprung up here since the crash.

Private equity operators like MML, Carlyle Cardinal Ireland and Renatus Capital have set up, as have debt providers like Capitalflow or Finance Ireland, which is run by former Irish Permanent chief executive Billy Kane.

Equity funding is less risky for a business than debt because it doesn't involve borrowing money that has to be repaid.

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Instead equity investors take a percentage of the company's shares, in the hope that they will be able to sell those shares at a later date for a higher price.

Some entrepreneurs are averse to taking equity investments however because it involves selling down part of their stake in a business.

However for others it can provide a way of monetising their shares, for which there can be a lack of liquidity in a relatively small market like Ireland.

MML says on its website that it backs "ambitious managers of small and medium-sized private businesses located on the island of Ireland to reach the next stage of their evolution, maximising growth opportunities at home and abroad".

Many private equity investors tend to leave management or existing shareholders with a substantial stake in the business, so the company can benefit from the latter's expertise and also give them an incentive to further grow the business.

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