CataCap Management, a Danish private equity firm, has held a 500 DKK (€67 million, $89 million) first close on its debut fund, which is targeting DKK 750 million to DKK 1 billion (€100 million – €130 million) to invest in Danish small and medium sized businesses, according to a statement.
The fund, which began fundraising in December 2011, has so far attracted three institutional Danish investors. Dansk Vækstkapital, a Danish firm that invests in unlisted funds, committed roughly €33.5 million – accounting for half of the first close. Additionally, Danica Pension, a wholly-owned subsidiary of the Danske Bank Group, and the Lægernes Pensionskasse, a medical pension fund, each invested the equivalent of €14 million, Vilhelm Hahn-Petersen, co-founder of CataCap Management, told Private Equity International.
“As a new fund, it was quite clear from our dialogue with both national and international investors that we needed to [establish a presence] in our local environment. So the first close has been with local investors, but we have a number of [international] specialist fund of funds who are quite keen on small-cap funds, particularly in the Nordic region,” he said.
As a new fund, it was quite clear from our dialogue with both national and international investors that we needed to [establish a presence] in our local environment
Rounding out the first close was €4 million from CataCap’s three co-founders in total and the balance from a number of private investors, Hahn-Petersen said, adding the firm planned to hold a second close by the end of this year.
Prior to founding CataCap, Hahn-Petersen spent a few years at Axcel, a Danish private equity firm, and used to be an operations director at budget airline Easyjet. His brother Jens Hahn-Petersen, an investment banker, has advised both Danish and international private equity funds. Peter Ryttergaard, the third founding partner, also has a background in private equity. As chief financial officer at FLS Aerospace/SR Technics, a Danish technical service provider for airlines, he completed the management buyout of the company with 3i Group and Star Capital Partners.
Gap in the market
Although the Nordic region has quite a number of established private equity players, there is a gap in the market, according to CataCap. “We think there is a need for a manager in the Danish small [and mid] cap segment that focuses on high growth companies,” Hahn-Petersen said. “We will target high growth companies within mature industries, and are focused on operational value creation,” he said, adding that CataCap will do majority buyouts.
The firm won’t be competing with larger players like EQT Partners and Nordic Capital on deals, he said. It is more likely CataCap will try to sell companies to these players. “We would very much like to include them in our exit universe,” he said.
In addition, CataCap hopes to benefit from the lack of funding in the Danish market. “Even though Denmark and the Nordic region have fared better than Southern Europe, there has been a funding drought, particularly in the small-cap segment,” he said. “We feel confident that we have the key to open up bank funding as a supplement to our equity funding and therefore prove quite attractive, particularly to those companies that have been hindered in their development because of this funding drought,” he added.
The firm has a generic investment approach but will be keen on investing in business services, as this is a sector the three co-founders know well, Hahn-Petersen said.