Leon Capital, with Blackstone and KKR pedigree, eyes debut pledge fund

Leon is among a handful of first-timers moving into the tough fundraising environment favouring existing relationships and established funds over newcomers.

Leon Capital, formed by executives from Blackstone, KKR and McKinsey, is preparing its debut fund for investments in mid-market tech-enabled services in Western Europe, sources told affiliate title Buyouts.

Leon is among a handful of first-timers moving into the tough fundraising environment that is favouring existing relationships and established funds over newcomers. As economic uncertainty persists, LPs tend to stick with their well-established relationships.

Still, first-timers and emerging managers are finding ways to attract capital. One successful strategy is spin-outs from larger firms, or teams made up of partners who already have strong LP relationships.

Leon Capital is planning to raise a pledge fund as its initial pool, potentially targeting up to €250 million, one of the sources said. The pledge fund structure allows LPs to commit to a closed-end fund, but with the ability to pick and choose which deals they want to support. In this way, the pledge fund is said to present less “blind-pool” risk than a traditional PE fund.

Leon Capital was formed this year by Jean-Christophe Napoleon Bonaparte, who previously worked at Blackstone and Advent International; Christos Lavidas, who formerly worked at KKR and a large global hedge fund with a private equity team; and Michael Youtsos, a former partner at McKinsey & Co, who led sustainable investing practice in Europe.

The firm will target investments in healthcare services, business services, software and energy transition. It will make control investments in family-founder-owned businesses with equity checks of €15 million to €100 million, sources said.

Last year, some 553 first-time funds collected more than $46 billion globally, according to Preqin data. That was down from the $52.8 billion raised by 572 funds globally in 2020. The peak was in 2017, when 924 funds globally raised $196.7 billion, according to Preqin’s information.

Other first-timers raising funds this year include Riverspan Partners, likely targeting $650 million for its debut pool, and Lone View Capital, targeting around $925 million for its first fund.

Read more here on Buyouts’ Emerging Managers page.

This report originally appeared on Buyouts.