Gamma Capital Partners (GCP), the Austrian early stage investment firm, has held a first close of its new fund, Gamma II Beteiligungs, at E10m. The announcement comes less than a year after GCP took over the management of former VC incubator iLab24.
Gamma II is described as a generalist technology fund that will invest in Austria and its neighbouring countries. It will target high-tech oriented growth-companies in areas such as ICT, life sciences, medical equipment and electronics.
GCP was backed by existing investors in GCP-managed funds as well as several new investors. The fund, which is targeting a final close capped at E25m within the next six months, received cornerstone commitments from Investkredit Bank AG and Raiffeisen Landesbank Upper Austria, with additional financing from a spread of Austrian investors. Half of the capital in the first close is re-financed via a securitised mezzanine debt obligation.
GCP says it will invest between E500k and E2m per firm in minority stakes, depending on the final size of the fund. GCP anticipates the fund being fully invested by 2006 and expects realisations between two and three years after investment.
Austria has been particularly hard-hit by the recent fundraising downturn. A number of funds have struggled to reach original targets. Last October, Go Equity held a final close of Go Equity II, on E54m, just over half the original E100m. At the time, Go Equity director Chris Kennedy described the fundraising environment as ‘extremely challenging’.
A recent report by EVCA highlighted Austria as a market with one of the least favourable tax and legal environment for private equity and venture capital within the European Union.
However, Oliver Grabherr, managing partner at Gamma, is upbeat about the investment prospects for GCP. “In addition to attractive valuations, competition has virtually withered away – we get proposals from as far as Hamburg and Switzerland and appear to be one of the very few active tech-investors in German-speaking Europe considering attractive smaller opportunities.”