Two Dutch private equity veterans have set up a fund of funds targeting managers investing in the Netherlands' 'MKB' sector (the Dutch term for SME).
Ad van den Ouweland, who set up Robeco’s private equity activities, and Peter Verleun, a former business development director for the UK and Ireland at Robeco, have joined forces to create MKB Multifunds I.
The fund, which has a €100 million target, will have a portfolio of 10 to 15 funds, Van den Ouweland and Verleun told Private Equity International. It will invest in funds focused on various sectors and strategies such as buyouts, mezzanine, venture capital, growth capital and turnaround investing.
The fund is currently in the pre-marketing phase. MKB Multifunds declined to comment on when it expects to reach the first close or which GPs it considers backing.
The vast majority of Dutch businesses are part of this market segment and 65 percent of the Dutch GDP comes from SMEs, according to Van den Ouweland and Verleun. “It’s the engine of the Dutch economy, but for investors it’s not easy to achieve diversification in this market,” the firm said on its website. MKB Multifunds aims to make the sector more accessible to institutional investors, private banks and family office, it added.
As well as targeting SMEs in the Netherlands, MKB Multifunds, like Robeco, has a strong focus on environmental, social and governance issues (ESG) and on impact investing, the pair said. “We don’t have a traditional management fee and carry system, because we also take into account the impact on society and environment,” they said. The carried interest will be based on both a financial and societal impact component, they said but declined to disclose the specific details. “We will base this impact on criteria we are currently drawing up,” they said.
We don’t have a traditional management fee and carry system, because we also take into account the impact on society and environment
Ad van den Ouweland and Peter Verleun.
ESG can be hard to measure, Van den Ouweland and Verleun admitted, “But we are working on a model that will help us define this. We also consider having these criteria assessed by an independent party,” they said. MKB Multifunds will only invest with a GP if they are convinced they will address certain ESG issues. “In our view it will be increasingly added to the traditional fund structure in the coming years.”
“In the past, the largest investor in the fund had the most influence on the GP. That is no longer the case. If an LP is creative and comes up with an innovative idea, which can improve the fund, GPs are often open to take up these initiatives,” Van den Ouweland and Verleun said. Together with the UK, the Netherlands is a front-runner when it comes to impact investing, according to the pair, but “by and large, impact investing is considered more and more by LPs in other regions”, they said.
While MKB Multifunds only invests in Dutch GPs, the firm still hopes to attract larger Dutch pension funds, which are more internationally focused. “There is a general sense among Dutch LPs to return to Holland, to invest closer to home, so investing in our fund could also be interesting for the larger pension funds,” they said.