OpCapita hits €350m hard-cap on Fund II – Exclusive

UK-headquartered turnaround specialist OpCapita has held a first and final close on its second fund on its €350 million hard-cap, Private Equity International has learned.

The fund was officially launched in mid-April and was fully allocated by the end of June, OpCapita founder and chief executive officer Henry Jackson told PEI. There was “significant” oversubscription, he said.

The fund is more than three times the size of Fund I, which closed in December 2014 on €110 million. However, that fund had an investment period of just two years and made three investments, German discount clothing retailer NKD, Spanish frozen food retailer La Sirena Alimentación Congelada, and designer womenswear retailer AppelrathCüpper.

Fund II will have a full five-year investment period and 10-year fund life, and is expecting to make six to seven investments, Jackson said. The average equity cheque will remain around €60-70 million.

“It was very important to investors, both existing and new, that we were going to continue to do the same thing: the same size investment, roughly the same investment pace, and the same investment strategy,” Jackson said. “The only real change is we’ve now got a five-year investment period rather than a two-year one.”

The investor base has also trebled from 11 in Fund I to around 30 in Fund II. The new fund has fewer funds of funds as a percentage of the overall investor base, it is understood; the majority of investors in the fund, by both number and size, are pension plans, both public and corporate, university endowments and charitable foundations.

Monument Group acted as placement agent for the fund. 

Jackson put the speed and success of the fundraise down to the firm’s track record, which he said investors had been following in recent years.

“It was so different to our experience in raising Fund I where we had to go and educate people. We raised Fund I only two years ago, so a lot of people knew us and had been tracking us very closely,” he said.

“It’s always helpful for investors to have watched us for a long period of time, heard what we said we were going to do and then seen that we’ve actually done those things.”

OpCapita recently agreed the sale of French furniture retailer BUT, which it acquired in 2008, to buyout house Clayton Dubilier and Rice in a deal which is understood to have generated a return of around 3x for its investors.

“Most other investors who looked at it weren’t convinced it had a reason to exist,” Jackson said. “We did a lot of work to understand its positioning in the market and became convinced that there was a real opportunity for that business.”

Jackson said the firm’s pipeline “has remained consistently strong”, but that OpCapita is “very disciplined” to make sure it doesn’t overpay.

“There isn’t much competition to invest in the types of businesses that we invest in, because they’re the ones that require more operational heavy-lifting,” he said.

“We’re really looking for operational improvement rather than financial restructuring opportunities.”