It is no secret raising a first time fund is hard, especially in the current economic climate. So some first time teams may feel encouraged by Netherlands-based Karmijn Kapitaal’s success in closing its debut fund last month, just under its €50 million target (the firm expected a €47 million final close at press time).
The firm’s strategy is to invest in Dutch companies led by management teams consisting of a balanced group of men and women. It expects to partner with female chief executives – but that’s not a specific requirement, as long as the management team is made up of at least 25 percent of either gender.
Studies have shown that less than 1 percent of private equity-owned companies in the Netherlands are led by mixed gender teams, compared to 15 percent in the wider small to mid-sized business space, Karmijn claims. According to co-founder Désirée van Boxtel, this points to “some kind of disconnect”. “We decided that if we approached the female CEO or CFO [in these companies] it could lead to interesting opportunities.”
This is a question of practicality, not ideology, she insists. “Studies have shown that companies with [both] men and women in its management teams perform better financially.”
Van Boxtel, who previously built ABN AMRO’s Participaties division (which invests in small and mid-sized Dutch companies), established Karmijn Kapitaal with Cilian Jansen Verplanke and Hadewych Cels. Jansen Verplanke worked with Van Boxtel at ABN AMRO Participaties and also built Rabo Participaties. Cels was co-founder of turnaround firm Plain Vanilla.
Karmijn held a €10 million first close in December 2011 and has made three investments so far. In April 2012, it invested in food business Enrico. In November 2012, it acquired YouMedical, a provider of over the counter ‘self-care’ products. And in August 2013 it bought part of Marlies Dekkers, a Dutch lingerie business, after its bankruptcy.
Van Boxtel admits raising capital wasn’t easy. Karmijn came to market in 2010 with the aim to reach its target in 10 months, says. But it was still “in the midst of the economic crisis – something we didn’t really think about.” Karmijn, which raised the fund on its own, was turned away by two placement agents, because of the small fund size and because it was a first time fund.
Additionally, the diversity angle did not appeal to everyone. As one LP puts it: “If you have pure financial considerations, then unless you can show firms with more than 25 percent women have a significant chance of better success, then why pursue that angle?”
But while Van Boxtel admits some LPs didn’t buy into the strategy, “the LPs that back us do believe in it”, she says.. As well as attracting some family offices, Karmijn has been backed by the European Investment Fund, which “really made the difference”, as it gave them “a seal of approval”.
Karmijn Kapitaal also claims its strategy won’t compromise on talent. “If a female CFO leaves we would obviously replace her with the best person. We are convinced that for every position you can find both suitable women and men – but if we could only find a suitable man for that role then clearly we would take him on. Eventually it’s about generating returns for our investors.”