Keensight Capital, a European growth investor, has held a final close for its new fund Keensight IV on its hard cap of €250 million, above its initial target of €200 million.
The fund, which was officially launched in May 2014 and held a first close on its target of €200 million in July, was “significantly oversubscribed”, according to managing partner Jean-Michel Beghin.
Beghin declined to comment on the GP commitment to the fund, but told Private Equity International that the team is “significantly involved and invested in all our funds”.
Keensight spun out from R Capital, a subsidiary of the Rothschild Group, in November 2013. Following the spin-out it acquired R Capital Fund III, a 2010-vintage €100 million vehicle which the team has continued to invest this year. By co-investing with LPs, the team invested around €200 million from the fund.
“Almost all our LPs reinvested in the new fund, and some of them invested significantly more than they invested before,” Beghin said. “So we had a very, very good base to build on.”
Around 90 percent of the vehicle’s subscribers are institutional investors, including pension funds, insurance companies and banks, with family offices making up the remainder.
Beghin said in a statement that returning investors include the Rothschild group, French financing and business development organisation Bpifrance, the Bankque Cantonale de Genève and the European Investment Fund. The fund has also attracted ten new European investors, among them the CERN Pension Fund, French insurance corporation CNP Assurances, and Allianz France.
Beghin told PEI that the firm’s strategy for the new fund will be the same, aiming to make around 10 investments over the next four years, but there will be fewer co-investments. The Keensight team will be looking to invest between €10 million and €30 million for both majority and minority shareholder positions in companies across Europe with revenues of between €15 million and €150 million which are profitable and growing fast.
“'Growing fast’ mean[s] above ten percent,” Beghin said. “The average growth of our current portfolio over the past five years was 24 percent per year, so we are really talking here about significant growth.”
Beghin said that one question that came back from potential new investors during the fundraise was: ‘does such a company still exist?’
“If some people doubt the existence of growth opportunities within the European market, they have the answer when they analyse our portfolio and the deal flow we have,” Beghin said.
Keensight has completed three investments over the last year, one of which was made from the new fund, a minority investment in performance-based online marketing company Labelium.
In January the firm took a majority stake in French open-source software business Smile for an undisclosed amount. In April it invested an undisclosed sum in Menix, a French producer of orthopaedic prostheses and dental implants, alongside the company’s management and fellow private equity groups Turenne Investissement and LBO Partners.
The team has also exited three of Fund III’s ten portfolio companies this year, selling its stake in Octo Telematics in February to Russian group Renova and recently completing the sale of FircoSoft, a company providing software solutions for filtering banking transactions.
The previous October, before the spin-out, the same team floated LDR Medical, a manufacturer of spinal implant devices, on the Nasdaq exchange in the US, where it achieved a market capitalisation of $489 million at the time. The firm is in the process of exiting this investment.
According to Beghin, the average return multiple across the three investments was 5x.
“Our three exits have allowed us to return more than the fund and there are seven companies which remain to be sold,” Beghin said.