Pan-European specialist IK Investment Partners has stepped up its small-cap strategy with the close of its latest fund.
The London-headquartered firm has amassed €1.2 billion for IK Small Cap Fund III, according to a statement seen by Private Equity International. The fund had a target and hard-cap of €1.1 billion in third-party capital and is just over twice the size of its 2018-vintage €550 million Fund II.
The fundraising took three months and was undertaken virtually.
Chief executive Christopher Masek told PEI that Fund III’s LPs comprise only existing IK investors, including a mix of Small Cap LPs and investors from the firm’s other strategies.
IK plans to make roughly 12-15 investments from the fund in companies with €50 million-€150 million in enterprise value. The vehicle also has a development capital pocket of as much as around €300 million for companies smaller than €50 million in EV. It will target growing companies across business services, healthcare, consumer and industrials.
IK’s small-cap strategy has allowed the firm to deepen its European focus, according to Masek.
“Developing the small-cap strategy pushed us to want to be more local than we were,” he said. He added that the firm decided to open offices in Amsterdam and Copenhagen and start investing in the UK off the back of the strategy’s launch.
The fundraise comes almost a year after the firm raised €2.85 billion for its ninth flagship strategy, as PEI reported.
IK’s investment team for its small-cap fund has more than tripled since its debut 2015-vintage €277 million vehicle and now has 30 investment professionals.
Small Cap Fund I has realised €425 million in proceeds, including seven full exits delivering a gross average 3.2x money multiple and 56 percent internal rate of return, according to the statement.
Managing partner Kristian Kemppinen, who is responsible for the small cap strategy, said Fund III will target a money multiple gross return of more than 2.5x.
Kirkland & Ellis acted as legal counsel to the fundraise. IK did not use a placement agent to raise the vehicle.
– This story has been updated to reflect that Fund III will target a more than 2.5x return.