Charterhouse eyes lower flagship target amid mid-market push for €2.5bn Fund XI

The Europe-focused buyout firm has reduced capital raising targets since 2009, when it shifted focus to smaller mid-market companies in the region.

Charterhouse Capital Partners is back on the fundraising trail with its latest European buyout vehicle Charterhouse Capital Partners XI.

The London-headquartered firm, which is in the early stages of its fundraising, is seeking €2.5 billion for CCP XI, according to documents prepared by Hamilton Lane for Teachers’ Retirement System of Louisiana’s investment committee meeting on 7 January.

That figure is €500 million less than the original target for its 2016-vintage predecessor, which collected €2.3 billion against a €3 billion target.

Charterhouse has been reducing its capital raising targets since CCP IX as it focuses on mid-market European companies with smaller enterprise values, according to IC meeting documents. CCP IX closed on its €4 billion target in 2009.

Capital raised for its latest vehicle will invest between €100 million and €250 million in up to 15 mid-market buyouts in Western Europe, according to documents.

Teachers’ Retirement System of Louisiana approved a $100 million commitment to the fund.

The firm typically makes a GP commitment of at least 2.5 percent in its funds, the documents show.

It is unclear how much has been raised thus far for CCP XI. Charterhouse declined to comment on fundraising.

Charterhouse is investing CCP X, which has received commitments from Canada Pension Plan Investment Board, Clwyd Pension Fund and Employees’ Retirement System of the State of Hawaii, according to PEI data. The fund generated a 1.6x multiple on invested capital and 20 percent IRR as of end-December 2020, according to a source with knowledge of the matter.

The firm focuses primarily on businesses in the services, consumer, specialised industrials and healthcare sectors.

Recent investments include PHASTAR, a specialist provider of biostatistics and data science services for clinical trials headquartered in London; Vermeg, a Dutch banking and insurance software solutions provider; and advisory firm Lane Clark & Peacock.

In 2019, the firm established a UK-China fund targeting £1 billion ($1.3 billion; €1.2 billion) in partnership with China Investment Corporation and HSBC to invest in UK SMEs with growth plans in China.

Fundraising for Europe-focused funds will be slower in 2021 amid increased uncertainty in the region due to Brexit and the global pandemic compounding that uncertainty, Mercer noted in its latest report, which outlines top considerations for private markets investors in 2021. Deal activity is also expected to decline this year over prior years, although this would depend on geography. As a result, some GPs may have to extend their investment periods, Mercer noted.

Europe-focused funds in market were targeting $81.5 billion as of 1 January, according to preliminary PEI data. Among the largest European funds in market are EQT IX, which is seeking €14.75 billion; Apax X, which is targeting $10.5 billion; and BC European Capital Xl which is targeting €8.5 billion.