Triton seeks up to €500m for niche strategy – Exclusive

The open-ended Triton Value Fund will take minority positions in publicly-listed companies.

Northern Europe-focused Triton Partners is seeking third-party capital for an open-ended fund that takes minority positions in publicly-listed companies, Private Equity International has learned.

Triton declined to comment.

Triton has been making investments in publicly-listed companies since 2009, initially using a small tranche of capital from its private equity funds. In 2015 the firm launched a separate fund, the Triton Value Fund, seeded with €60 million of capital from Triton’s partners, according to a source with knowledge of the matter. The fund has a minimum commitment of €1 million, which opens the firm up to a broader investor base, the source said. The fund is understood to be targeting a range of between €300 million and €500 million.

Triton’s primary private equity business is currently investing the €3.5 billion Triton IV. It is understood the firm will be looking to partner mostly with family offices and smaller institutional investors that otherwise would not be able to access the Triton fund.

According to the source, the main share class of the fund has a three-year lock-up period. Triton will provide investors with monthly valuations in the form of a NAV statement.

The fund will charge an annual management fee and a performance fee. It is unclear how much these will be, although it is understood to be lower than those of a traditional private equity fund.

The Triton Value Fund will leverage the network and expertise of Triton’s mainstream private equity business, investing in companies that are the same size, and in the same sector and geography as its flagship funds. It will offer portfolio companies the opportunity to work with top industry experts that would usually not be available to such businesses, and will work actively to drive value creation.

It will seek to hold eight to 10 assets at any one time, taking a stake of up to 30 percent, which it will hold for an average of three to four years. It will seek market-leading businesses with good structural growth but that are underperforming. The fund will not use significant leverage, the source said.

The fund took in its first third-party investors in the second half of 2016, and is understood to have already invested in eight companies.

One of these investments is Munksjö, a specialty paper producer headquartered in Sweden and listed on the Nasdaq Helsiniki.

The Triton Value Fund is understood to be targeting a return of more than 15 percent without using a significant amount of leverage, and therefore has a slightly lower return criteria than its mainstream private equity funds. historically, however, this strategy has been better performing, delivering an annual return of more than 30 percent, the source said.