IK hits €277m hard-cap on debut small cap fund

The total fund size includes a GP commitment of €27 million.

IK Investment Partners has held a final close on its debut small cap vehicle on its €277 million hard-cap.

The fundraising for IK Small Cap I Fund officially began in March 2015 with a target of €250 million, and held a first close in June last year on around €100 million.

Campbell Lutyens acted as placement agent for the fundraise.

Anders Petersson, an IK partner who leads the small cap team alongside partners Kristian Carlsson Kemppinen and Pierre Gallix, told Private Equity International that the final amount collected includes a GP commitment of €27 million.

Petersson said investors in the fund are a combination of European and North American LPs, and a small majority are existing IK investors, and a “very good share” are new investors.

Among IK Small Cap I’s investor base are SL Capital, Ardian and the European Investment Fund.

The introduction of a small-cap arm “widens our organisation overall”, allowing IK to take advantage of opportunities in its target markets previously out of reach, Petersson said.

“It’s a segment where we have been seeing a lot of good investment opportunities for some time, we’ve thought about it for some time. They have just been, in terms of size, too small to invest into from the mid-cap fund.”

Petersson said the fund will look to make between 10 and 15 investments in business with an enterprise value of up to €100 million, writing equity cheques of between €10 million and €30 million.

“When we started out in the late 80s, early 90s, we invested into this segment. We have good experience, we think that we can apply a very similar strategy in active ownership to really drive growth in these companies,” Petersson said. “Especially also, of course, we see opportunities to internationalise companies, given that we have a pan-European footprint.”

The fund will focus on majority investments, although it does have the flexibility to make minority investments.

“We thought it was good for the small-cap segment to selectively do larger minority investments, specifically when you have privately or family-owned companies, growth situations,” Petersson said.

Small Cap I will invest across the same geographies as IK’s mid-cap funds: Benelux, the DACH region, France and the Nordics. It will also retain the same focus on IK’s core investment sectors: industrials, with a focus on engineering; healthcare; consumer goods; and business services.

“We will stick to the same industry sectors and [use] that experience combined with internationalisation [to drive] growth. That is the strategy and I think there was a lot of support for that from the investors and they could see that natural extension.”

The fund has already made three investments, backing fire protection and damage management solutions company svt Group, based in Germany, Auxiga Group, a French and Belgian pledge inventory services provider, and Scandinavian kitchen manufacturer TCM Group, which it acquired from Danish private equity firm Axcel.

“We see good investment opportunities across the geographies that we’re focusing on,” Petersson said.

In January PEI reported that IK’s latest mid-cap vehicle, the 2013-vintage, €1.4 billion IK VII Fund, is understood to be 75 percent invested following the acquisition of IT services company TeleComputing. A market source speculated at the time that the firm could start thinking about its next flagship vehicle following the close of its small-cap fund.

IK declined to comment on any fundraising plans.