HgCapital books 3.5x on German trade sale

This is the 12th exit from HgCapital 6, which has now delivered overall realised returns of 2.3x.

HgCapital has agreed to sell Germany-headquartered Qundis, a manufacturer of devices to measure heat and water consumption, to Kalorimeta, according to a statement from the firm.

Following the sale, HgCapital will retain a minority position in the combined group.

The deal is set to generate a return of 3.5x and an internal rate of return of 30 percent for investors in HgCapital 6, a 2009-vintage fund which closed on £1.9 billion ($2.44 billion; €2.24 billion).

Investors in that fund include the Colorado Public Employees’ Retirmenet Association, the West Midlands Pension Fund, and Teacher Retirement System of Texas, according to PEI data.

Qundis is the 12th exit from HgCapital 6, which has now delivered overall realised returns of 2.3x and a gross IRR of 24 percent, the firm said. The fund has returned in cash 120 percent of the original investment made, and still holds eight portfolio companies.

The firm said “a number of further realisations from HgCapital 6 are anticipated over the coming months”.

HgCapital initially invested in Qundis, which supplies sub-metering and communication devices used to measure, collect and transmit consumption data for head and water usage, in May 2012. In 2013 HgCapital helped the business consolidate its production facilities into a single new site, develop gateway and software solutions to offer a remote read-out solution, and to develop into new customer segments and service offerings.

Germany and Italy are the largest markets for the company, whose products are sold in more than 30 countries.

The buyer, Kalorimeta, is a German investment group which provides climate-intelligent solutions in the buildings sector.

In February HgCapital held a final close on its eighth fund on its £2.5 billion hard-cap having attracted investor demand in excess of £7 billion. At the same time it closed its Mercury 2 fund – focused on investments in the TMT and tech-enabled services industries – on its £575 million hard-cap, which was also more than three times oversubscribed.

HgCapital 8 officially launched in September 2016 with a target size of £2 billion and held a first close in December on £1.9 billion.

The fund received a re-up rate of around 90 percent. HgCapital Trust, the listed entity that invests only in HgCapital’s funds, is understood to have committed £350 million to the vehicle.

HgCapital made a GP commitment of at least 2 percent to each vehicle, as reported by Private Equity International.

In March the firm made a series of senior promotions to strengthen its executive team. Steven Batchelor, who heads the firm’s client services team and who led the two fundraisings over the past year, Jonathan Boyes, a member of the firm’s TMT team, and David Issott in its Mercury team, became partner.

The firm also promoted partners Matthew Brockman and Justin von Simson to managing partner, joining Matthew Rourke, managing partner and head of the services team.

Following these promotions, HgCapital has 16 partners and a total team of 120 people, based in London and Munich.