Graphite doubles money, makes 22.4% IRR on £110m London Square sale to Ares


british-rural-street-scenery-787925-mMid-market private equity firm Graphite Capital has sold house building company London Square at an IRR at 22.4 per cent, an AltAssets source close to the deal said.

The UK-based firm has sold the London house builder to global asset manager Ares Management for an equity value of £110 million, more than doubling its initial investment in the deal.

Graphite first invested in London Square with £50m of equity capital in 2010, with RBS and HSBC supporting the company with £70m in debt facilities. Since then it has completed developments in Shoreditch, Wimbledon and Ruislip.

Graphite senior partner Mike Innes said, “We are very pleased with the investment return. In four years, [London Square] have created a market-leading group with an extensive pipeline of new sites.

“The first stage of London Square’s development has now been completed and we wish … the team every success for the next stage.”

Ares Management is buying London Square in a joint investment by its private equity and real estate funds.

The London house building business has six sites underway including a development of 40 luxury townhouses in the heart of Fulham and the restoration and conversion of the historic Grade II-listed Royal Star & Garter Home on Richmond Hill. Both projects are being jointly developed with Ares.

Last year Graphite exited its investments in Willowbrook Healthcare and Optimum Care, for which Graphite had provided development capital to build or acquire high-quality care homes.

The firm scored a return of almost six-times by selling supply teacher and education support staff provider Education Personnel in a £300m deal in May this year.

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