First-time funds: Europe

In an era where investors are increasingly focused on experience and track record, it’s arguably never been harder to raise a debut fund. Yet some groups are managing to buck the trend.

It’s hard enough for anyone to raise money in Europe at the moment – let alone a first-time manager. 

Track record is the top priority for most LPs. So while many are willing to consider first-time funds, first-time teams are unlikely to receive support.     

For instance, last year PGGM invested in Equistone IV, the manager’s first independent fund since its spinout from Barclays. “It’s a new name but the same team that previously managed three Barclays funds – that is an important difference,” says Maurice Klaver, investment manager at PGGM. The Dutch pension fund also recently backed Gilde Healthcare Services. “This was a new fund focused on a new strategy, but with an experienced Gilde organisation behind it,” he adds.

You can have a team of individual stars, but that doesn’t necessarily mean that these 11 players collectively are effective

Maarten Vervoort, AlpInvest

Maarten Vervoort, managing partner and co-head of the global fund team at AlpInvest, is also nervous about first-time teams – even if the principals have good track records individually. “It’s a similar situation in football; you can have a team of individual stars, but that doesn’t necessarily mean that these 11 players collectively are effective as well and it’s the same with investment professionals.”  

LPs must have a very good reason to back a first-time fund – and that’s unlikely to be a specific strategy. “We wouldn’t just back a firm because they operate in a sector to which we haven’t got any exposure yet,” says Klaver. 

Equally, some LPs feel there isn’t sufficient upside given the risk involved. “We don’t feel you get rewarded as an investor, unless you take a piece of the management company or a piece of the carry for supporting them,” says Francesco di Valmarana, a partner at Pantheon.  

There are, however, some promising newcomers attracting LP attention – most of whom have a Northern European focus.

THREE DEBUT FUNDS TO WATCH

1
CataCap Management: In a first close of 500 DKK (€67 million, $89 million) held in January, the Danish firm managed to attract three Danish institutional investors. It’s targeting €100-€130 million to invest in Danish SMEs, where it believes there is a funding gap. The strength of the industry in the region should help; CataCap hopes big firms like EQT and Nordic Capital will eventually be part of its “exit universe”.   

2
Adelis Equity Partners: Keep an eye on Jan Akesson, an ex-Triton partner, and Gustav Bard, a former managing director at 3i Nordic, one LP tells PEI. The pair, who could not be reached for comment, started Adelis Equity Partners in November last year, according to their LinkedIn pages; it will reportedly target the lower-mid market in the Nordic region. Adelis has no website or SEC registration yet, but it has hired Adalbjörn Stefansson as a partner and head of investment relations, according to Stefansson’s LinkedIn page – suggesting the team is keen to connect with LPs. 

3
MKB Multifunds: Established by Ad van den Ouweland, who set up Robeco’s private equity activities, and Peter Verleun, a former business development director for the UK and Ireland at Robeco, MKB Multifunds I, a fund of funds with a €100 million target, will build a portfolio of 10 to 15 funds that are focused on investments in the MKB segment (the Dutch term for SMEs). Like Robeco, it will have a strong focus on environmental, social and governance issues (ESG); both financial and societal impact will be factored into the GP’s reward calculation, they say.