Exclusive: Polaris preps fundraise after lighting deal

The Copenhagen-based firm will come to market this summer to raise approximately €365m for its Fund IV.

Polaris Private Equity, a lower-mid market firm operating in Denmark and Sweden, is preparing to raise a successor fund, PEI has learnt.

The fund will come to market in the summer and will target approximately €365 million, Jan Kühl, Polaris’ managing partner exclusively told Private Equity International.

The firm’s latest fund, the €365 million Polaris III, raised in 2009, will be approximately 75 percent deployed following Polaris’agreement this week to acquire Louis Poulsen Lighting, a Danish manufacturer and distributor of design lamps.

Financial details of the transaction, which is subject to customary approvals, were undisclosed. The deal value was DKK 700 million (€94 million, $128 million), according to a market source. Polaris typically targets businesses with an enterprise value of between €30 million and €150 million.

Copenhagen-based Louis Poulsen has a workforce of about 450. Its 2013 revenues are expected to be DKK 675 million (€90 million, $124 million) of which approximately 70 percent comes from international sales.

Polaris previously owned the business for nearly eight years as a portfolio company in its Fund I.“We sold it in the summer of 2007 and we made a return of close to 7x,” Kühl said. “It was one of our best deals.”

Polaris bought the company in an auction process from Italian Targetti Sankey Group, to which Polaris sold Louis Poulsen in 2007.

“When the financial crisis hit, Tagetti experienced some problems and that is the reason why they have decided to sell the business,” Kühl said. 

“We will carve it out from this Italian group. We are refocusing it and we are going to invest more money into products and marketing,” he added.

Polaris plans to expand the business further into emerging markets. “We also plan to re-enter the UK market where we see some interesting potential for the products,” Kühl said. 

Polaris I, a €180 million 1999-vintage Danish fund has been fully realised. Fund I generated a gross IRR of 19.9 percent, a net IRR of 16.9 percent and a 2.5x multiple. Polaris II, a €270 million 2005-vintage is fully invested in 10 platform companies in Denmark and Sweden and has completed 16 add-on acquisitions. The fund has room for further add-on investments.

Since its inception in 1998, Polaris funds have invested in 28 companies, completed around 50 add-on acquisitions and made 14 realisations. The firm’s limited partners include Nordic companies and investors such as A.P. Møller-Mærsk, ATP Private Equity Partners, Danske Bank and Kirk Kapital, as well as international institutional investors such as Pohjola and Alliance Trust.