VCM Golding Mezzanine II raises €238m

VCM and Golding Capital Partners, German fund of fund investors, have raised €238m for their second fund of fund investing in US and European mezzanine vehicles.

VCM Golding Mezzanine II, the second fund of funds managed by Munich-based fund managers VCM and Golding Capital Partners, has closed on €238 million ($300 million).
 
The close comes just over a year after VCM and Golding Capital Partners raised €200 million for VCM Golding Mezzanine, Europe’s first subordinated debt fund of funds.
 

The overlap between the two funds means we have firepower of almost half a billion, which puts us in the unique position of having one of the largest warchests for mezzanine investment in Europe.

Jeremy Golding, founding partner, Golding Capital Partners

Hellmut Kirchner, founding partner at VCM, said that the second fund was raised so soon after its predecessor due to investor demand: “We had contact from a number of potential clients that couldn’t get agreement from their boards in time for the first fund, especially as it was a worldwide first-time vehicle focusing exclusively on mezzanine funds.”
 
Kirchner said that the fundraising, for which there was no placement agent, significantly exceeded the firm’s internal target of €100 million to €150 million.
 
Fund II will follow its predecessor’s strategy of investing 50:50 between European and US mezzanine funds. As fund I is only just over 50 percent invested in 20 funds, Kirchner said that there would be some overlap, with both funds investing in certain transactions: “We will focus on funds dealing in small and mid-market transactions. Not the €1 billion transactions but the  €100 million transactions, where they will typically provide €10 million to €20 million in mezzanine.”
 
Jeremy Golding, founder of Golding Capital Partners, said that fund II was conceived as an extension of the first fund. “We had been speaking to investors for over a year, explaining the product, so we said we would keep the fundraising process open after we had closed the first fund. The overlap between the two funds means we have firepower of almost half a billion, which puts us in the unique position of having one of the largest warchests for mezzanine investment in Europe.”
 

Kirchner: significant demand exceeded €150 million target

As with fund I, limited partners in Golding Mezzanine II were predominantly German institutional investors, including insurance companies, savings banks and pension funds. although there were also commitments from investors in Austria, Luxembourg and Kuwait. At least one investor in the first fund committed to the new fundraising.
 
“There were investors outside of Germany, but the focus was on German institutional investors, which is where Golding Capital Partners’ core expertise lies,” said Golding. “Our speciality is in understanding the complex regulatory, legal and tax issues in Germany and then putting unique structures around those needs.”
 
Both funds aim to generate a net internal rate of return of 10 percent. Kirchner said that returns from fund I are going “according to plan” and was currently a one-digit percentage.