3TS to raise €200m for CEE

The firm, fresh from the success of a portfolio company’s $100m NASDAQ IPO, will go to market for a third CEE fund following secondary sales negotiations over its 3i-backed predecessor fund.

3TS Capital Partners will later this year begin to raise its third Central and Eastern Europe-focused fund, likely targeting commitments of €200 million. Its predecessor, which garnered a €100 million commitment from 3i, closed on €130 million in 2005.

The firm had initially planned to begin fundraising for 3TS CEE Fund III earlier this year, but postponed official marketing until the second half of 2009 due to “secondary discussions related to the 3i-sponsored 3TS CEE Fund II, which have been active since the beginning of 2009 due to changes at 3i”, a spokeswoman said. She added the firm will communicate timing and target amounts at a later date.
3i has been working to shore up its balance sheet and pay down debt, selling various assets including 10 venture capital stakes to secondaries firm Cipio earlier this year. It is also in the process of selling the remainder of its European venture capital portfolio, which several market sources have said may be purchased by DFJ Espirit with the backing of secondaries firms Coller Capital and HarbourVest Partners.

The European Bank for Reconstruction and Development (EBRD) disclosed in January that it was considering investing up to €40 million in 3TS CEE Fund III, which according to the EBRD documents has a €220 million hard-cap.

The EBRD has committed to 3TS funds in the past, as has KfW Bankengruppe,  along with  fund of funds Global Vision,  Alpha Associates and 5E Holding. 3TS has also invested dedciated funds on behalf of tech giant Cisco. The firm was originally founded in 1999 to manage two CEE-focused funds for Sitra (the Finnish National Fund for Research and Development)  and TH Technologieholding, a German VC fund that was purchased by 3i for £102 million in 2000.

3TS CEE Fund III will invest in small- and medium-sized companies in fast growing sectors including consumer, healthcare and financial. It will also invest in telecoms, technology, media, renewable energy and industrials sectors, according to EBRD documents.

During its road show 3TS will be able to point to a success from earlier this month: the $100 million initial public offering on the NASDAQ for LogMeIn, whose predecessor was originally a Hungarian company called Remotely Anywhere.

3TS was the company’s first insitutional backer in 2004. LogMeIn, which provides users remote access to computers via the internet, has raised roughly $30 million total in venture funding from various firms, 3TS said in a statement.

Those firms include Intel Capital, Integral Capital Partners, Prism VentureWorks and Polaris Venture Partners, according a Wall Street Journal report preceding the company’s 1 July NASDAQ float.

“LogMeIn has now accomplished probably the largest ever technology IPO by a company with Eastern European origins. We believe this shows that with innovative products, talented management, sufficient financial backing and solid execution a company can grow from humble beginnings to become a leader even in this current challenging economic environment,” Pekka Mäki, 3TS managing partner, said in a statement. He noted that 3TS will continue to back LogMeIn post-IPO.

3TS is owned by management, Sitra and 3i, according to its website.