German private mid-market buyout firm Halder has unveiled plans to launch a E150m private equity fund targeting the much sought after mittelstand market in Germany. The new fund comes at a time when many other European private equity firms have reduced or ended their activities in Germany citing the absence of substantive transaction opportunities.
Halder, which was acquired by Belgian private equity firm Gimv in 2000, will receive an investment of at least 19.9 per cent of the total fund size, up to a maximum of E30m. Gimv will also be entitled to a small share of the carry.
The fund will not have a specific sector focus, but will instead look to invest in family-owned companies with turnover of between E25m and E125m. “There are more than 11,000 companies operating in this sector,” says Paul De Ridder, founding partner and managing director of Halder. “Despite a lot of interest, very little has happened in this sector. We have sought to build up a level of trust with businesses and their advisors over the past twelve years which puts us in a strong position when succession issues arise.”
The fund is aiming to make equity investments of between E5m to E20m in around ten to 15 companies. The fund will also look to participate in syndicated deals where suitable. In its two most recent funds, Halder III and IV, the firm invested in 46 companies, including 17 German participations. “We have kept a deliberately narrow focus for our investment strategy over the past twelve years. Almost all of our transactions have been buyouts,” said De Ritter.
De Ridder also said the fund would hold a first close later this year, with a final close scheduled for some time in 2004. “The fund has a tremendous opportunity to succeed at a time when we are finally seeing long-awaited changes in the German economy. Industry consolidation will provide us with good dealflow as well as exit opportunities, and we will also benefit from the departure of around half of our competitors in the mid-market.”
The firm is structured as a Dutch limited partnership and is being advised by Freshfields (legal) and KPMG (tax). Credit Agricole Indosuez will be acting as placement agent for the firm’s fundraising in France.