Palamon strikes €81m deal from soon-to-close Fund IV

The European firm has acquired Sweden’s Happy Socks in the fifth deal from its fourth fund, which is nearing a final €400m close.

London-based Palamon Capital Partners has invested SKr 765 million (€80.5 million; $86 million) in Happy Socks in the fifth deal from Fund IV, which is nearing a final close.

The transaction values the company at SKr 725 million, with Palamon committing SKr 40 million of growth capital to support the expansion of the business.

“Happy Socks is a phenomenal company with a very distinctive brand DNA that resonates with consumers around the world. Palamon’s investment stems from the firm’s ongoing effort to identify well-positioned European specialty retail brands with strong growth potential in a global market,” said Ali Rahmatollahi, partner at Palamon Capital Partners.

The firm said Happy Socks, which was founded in 2008 and sells its products in more than 90 countries, has grown Ebitda by more than 50 percent annually over the last three years, and generated retail sales of €100 million in 2016. Happy Socks competes with brands such as Ralph Lauren, Calvin Klein and Paul Smith but “at much better price points,” a spokesperson said.

The deal is the fifth from Palamon IV, which the firm began raising in summer 2015. A source told PEI the firm is close to achieving its €400 million target. The amount is almost double that raised by the firm for its third fund, Palamon Auxiliary Partnership 2013, a fund with a truncated two-year investment period which closed on €210 million in 2013.

In October last year the firm sold Spanish care home operator SARquavitae in a deal that returned almost €140 million in proceeds to LPs in the firm’s second fund.