Swedish private equity house Industri Kapital has held a first close of its latest fund, IK 2003, which is targeting a final close of E2.5bn next year.
The fund has secured commitments of E500m at the first close, with HarbourVest Partners, Pantheon Ventures, Swedish insurer Skandia and Scandinavian financial services group Nordea among the limited partners at the first close, according to Reuters.
News of IK’s first close follows recent interim closings at a number of rival buyout firms which, like IK, have encountered lengthier than expected fundraising processes. Last week, Doughty Hanson held a E700m first close of its E3bn fourth fund. Terra Firma Capital Partners announced that it had secured E700m in additional commitments at the second close of the first fund the firm has launched since gaining independence from Nomura in 2001.
IK 2003 is the successor to the firm’s IK 2000 Fund, which closed on E2.1bn in November 2000. The fund will invest in mid- and large-cap buyout opportunities across Europe. The firm operates from offices in London, Hamburg, Oslo and Stockholm.
Private equity firms raising capital often expect a successful first closing to generate additional momentum for a fund that is being organised. Sources close to Industri Kapital say the firm will add a number of additional limited partners in the coming weeks from LPs who are planning to make commitments following the first close.
When announcing Doughty Hanson’s interim closing last week, Stephen Marquardt, head of fundraising, said this was a growing trend. “In the past it was commonplace for funds to achieve first closing of at least half of their target. Now we seem to have a reverse of the 80/20 rule, with most investors waiting until after first close before committing.”
Industri Kapital is likely to boost its fundraising process with a number of exits it is expected to make over the next twelve months.
In September, the firm said it had hired Merrill Lynch and Carnegie to pave the way for an IPO at Swedish cosmetics company Oriflame. A flotation of the company would be likely to value the business at around E1.5bn. Industri Kapital took the company private for less than E380m from the London Stock Exchange in 1999.
The firm has hired CSFB as placement agent for the fundraising and Clifford Chance will provide legal advice to the fundraising.