MML Capital (MML) has officially closed MML Dorchester SCSp, a new continuation fund that has garnered over €630 million in commitments from investors. This fund is strategically designed to acquire stakes in two European business services companies that are currently held across MML's prior Partnership Capital funds, as well as interests owned by other shareholders.
The financial performance of these companies has been impressive under MML's stewardship, with both entities more than doubling their EBITDA during the holding period. This growth can be attributed to a blend of strong organic performance and strategic acquisitions that have enhanced their market positions.
The continuation fund offers existing limited partners the option to either cash out and realize their returns or to maintain their exposure and benefit from the anticipated next phase of growth for these companies. This flexibility is crucial as MML aims to provide the additional time and capital necessary for further expansion in the coming years.
The fund was notably oversubscribed, indicating strong investor confidence, and was underwritten by HarbourVest Partners as the senior lead investor, with StepStone Group participating as co-lead investor. Other existing and new investors also contributed significant commitments, reflecting a robust interest in MML's strategy.
PJT Partners acted as the exclusive financial adviser for this transaction, while Simpson Thacher & Bartlett provided legal counsel. Additionally, Rothschild & Co played a key role in advising on refinancing processes and offered strategic corporate finance guidance for the portfolio companies included in this continuation fund.
Looking ahead, MML Capital's strategic rationale for this continuation fund centers on leveraging the existing operational momentum of the portfolio companies to drive future growth. The anticipated benefits include enhanced scalability and the ability to capitalize on new market opportunities in the European business services sector.
As for the timeline, while the specific closing date for MML Dorchester SCSp has not been disclosed, the fund is expected to mobilize quickly to seize growth opportunities. The next steps will involve executing on the identified strategies to expand the portfolio companies.
In terms of market impact, this transaction is likely to bolster shareholder value for existing investors while also creating potential job growth and operational synergies within the portfolio companies. Regulatory concerns appear minimal, as this is a continuation fund rather than an acquisition of new entities, but MML will continue to monitor compliance requirements as they move forward with their plans.