Herkules closes Fund IV on NOK 2.5bn

The fund, which targeted NOK 6bn (€710m, $880m), reduced its target earlier this year

Norwegian group Herkules Capital has closed its fourth fund on NOK 2.5 billion (€300 million, $370 million), significantly below its initial NOK 6 billion target.

The fund has attracted several Norwegian and international investors including 3AP Fonden, Auda, SL Capital, Pantheon, DB Private Equity, AlpInvest and Argentum, the firm said in a statement on Tuesday.

In June, PEI revealed that Herkules had reduced the target of its latest fund. The vehicle, which came to market in January 2013, held a NOK 1.5 billion first close last December (€180 million, $250 million), raising capital from existing investors. The firm has then held a number of ‘rolling closes’, a source familiar with the matter told PEI at the time.

Tore Rynning-Nielsen, a senior partner at Herkules, confirmed in June the fund would be smaller, but declined to disclose the revised target and hard-cap. The reduced target is due to two things, he said. “We have already made four investments in the fund, so we can’t really keep the fund open too long.”

Additionally, contrary to the firm’s prior fund, Herkules IV will provide co-investment opportunities in “most of our investments”, which means Herkules can invest from a smaller vehicle while having the same strategy as Herkules’ prior fund, Rynning-Nielsen said. The fund will make approximately 10 investments focusing on energy, consumer goods and retail, healthcare and pharma, services and specialized industries.

The group’s fundraising has been moving at a slower pace than expected. Herkules IV came back to market a bit too early, when Fund III had not matured as much as some investors had anticipated, the source said in June, but added that the firm has a good track record.

In June, Herkules sold Nordic transformer supplier Noratel to Acal, a European corporate for NOK 735 million (€90 million, $123 million). This exit yielded the firm a 7x return and a 30 percent IRR, Rynning-Nielsen said. Following this divestment, Fund I, a NOK 2 billion vehicle from 2004, was fully realised, generating a return multiple of 7.2x, and an internal rate of return of 102 percent.