The private equity firm, which was founded in 2008 by corporate finance advisers Dow Schofield Watts Group, plans to raise £25m from high net worth individuals. PHD’s partners will invest a minimum amount of £1.75m.
PHD invests in UK businesses valued at under £10m. It acquired Barber of Sheffield in 2012.
The firm said its first fund is on track to deliver an internal rate of return of 24.6 per cent net of all fees.
PHD managing director James Dow said: “The exceptional performance of Fund 1 has created strong support from our existing investors to grow and develop our investment business in this dynamic group of UK companies.
“Our ability to invest and exit investments to generate attractive returns over this economic cycle is a testament to our capability to create investor value.”
Partner Andy Dodd added: “We will continue to build on the success of our proven capability to partner with emerging growing businesses.”
Since buying manufacturer Barber of Sheffield, the company has “significantly” exceeded its targets and now delivers medical consumables to 66 countries.