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Exclusive: IK sets up small-cap arm

The firm aims to capitalise on opportunities that fall outside the mandate of its €1.4bn mid-market fund

London-headquartered IK Investment Partners, is in the process of setting up a small-cap arm and raising a dedicated small-cap fund, PEI has learnt.

The firm, which invests in the Nordics, the DACH region, France and Benelux, has recently come to market to collect €250 million for its debut small-cap fund, according to several sources.

IK is working with placement agent Campbell Lutyens on the fundraising, it is understood. IK declined to comment on fundraising, while Campbell Lutyens did not respond to a request for comment.

IK is currently in the process of setting up a team, which will operate alongside its current mid-market team in IK’s core regions.

The firm’s small-cap fund will write equity tickets of between €10 million and €30 million and it is understood that the fund has “strong support” from existing investors.

IK will put in a “significant GP commitment”, one of the sources added, and will use that GP commitment for the first deal from this vehicle, which is expected to happen shortly. The fund is expected to hold a first close this summer.

The Northern European-focused firm is establishing the small-cap capability in order to capitalise on the opportunities it sees which are significantly below the deal size of its main mid-market fund. IK is currently investing from its IK VII fund, which closed in December 2013 at just under €1.4 billion.

That fund, which has a five percent GP commitment, was the first fund raised since Christopher Masek and Detlef Dinsel took over as managing partners from Björn Savén in 2010, with the latter moving to a chairman role.

IK’s Fund VII has so far made eight investments. Last November, IK acquired a majority stake in Løgismose and Meyer, two Danish food businesses, while in October, the firm bought Evac Group, a Finland-based water and waste management business which focuses on the marine, offshore and building sectors.

Other investments from the fund include Norwegian survival suit rental business Hansen Protection, Ampelmann, a supplier to the offshore energy sector, fuel management services business VPS, Ramudden, a specialist provider of temporary traffic control services, and Exxelia Group, which manufactures components used in the medical, railway, defence and oil sectors. The vehicle is currently 43 percent invested.