Verdane Capital, a Scandinavian direct secondaries specialist, has held the final close on its first direct buyout private equity fund on its SKr3 billion ($365.5 million; €297.4 million) hard-cap.
The significantly oversubscribed Verdane Edda fund – which launched in October – secured around 40 percent of its commitments from Nordic limited partners by value, managing partner Bjarne Lie told Private Equity International. Around 40 percent were from European LPs, comprising mostly UK and Swiss investors, and the remaining 20 percent originated from the US.
“We are worried about the overall pricing that’s in the market and didn’t want to feel the pressure of deploying too large a fund too fast in this macro context,” Lie said.“We didn’t really try to maximise oversubscription – that’s doing everyone a disservice. It’s about managing it in the right way to avoid broken glass and all those people wasting their time.”
Verdane Edda will be the first of its vehicles to target strictly direct transactions in single companies. The fund – which was advised by Rede Partners – will seek controlling or co-controlling stakes through equity tickets of up to €50 million, with a sweet spot of €15 million to €30 million.
“What we have felt was really a hole in the market starting from where we stop investing with the Verdane Capital series and ending where international technology-focused houses get out of bed and start investing ticket size-wise,” he added. “The paradox we’ve struggled with is that in the Nordic region, which is arguably the most digitally savvy and overrepresented in terms of these sort of businesses, didn’t really have a player like that.”
Verdane’s strategy with its Edda fund is due in part to recent successes in its direct portfolio. In May the firm partly exited its stake in Nordic e-commerce platform Boozt via an initial public offering after growing its annual turnover from €12 million to over €200 million within five years.
The Oslo-headquartered firm has previously raised six direct secondaries vehicles targeting portfolios of technology-enabled Nordic companies and direct investments of up to €15 million, according to PEI data. It will continue to pursue portfolios through its flagship series of funds, Lie noted. Verdane Capital IX, an SKr3 billion 2016-vintage, is around 50 percent invested and a successor is likely to come to market in the next 12-18 months.
“The direct mandate so far has been embedded in the broader portfolio and small direct fund, with the majority of the capital earmarked for [the former],” Lie said. “We want to leverage what we’ve learned over the past 15 years to be able to support slightly larger companies.”