European Fund Briefs, October 2012

Danske Fund Attracts Nordic Pension Funds

Relying mostly on Nordic institutional investors, Danske Private Equity, an arm of Denmark’s Danske Bank, has passed its target for its fifth fund-of-funds.

Danske PEP V closed at a hard cap of €650 million ($843 million), €50 million ($50 million) above target, with three-quarters of its investors returning from Danske’s 2008-vintage, €605 million Fund IV.

With that fund now fully committed, its successor has made four primary investments in North America and two in Europe, where it has also completed one co-investment and one secondary deal.

Danske expects to buy into one or two more European funds before the end of the year, a spokesman said.

Continuing the strategy of its predecessor, Danske V will invest in small-to-mid-market buyout funds in Western Europe and North America, and will allocate roughly the same capital to both regions.

Up to one-fifth of the fund will be reserved for secondary and co-investment deals.

Dankse’s previous fund completed four secondary purchases, a number the firm would like to exceed with its latest vehicle, “but only if the pricing is correct,” a spokesman said.

About 10% of the investors in Danske PEP V were life insurers and family offices, and almost all the rest were pension funds.

Pitango Ready to Deploy Sixth Fund

Herzliya, Israel-based tech investor Pitango Venture Capital has overcome tough fundraising conditions to hit a $150 million close for its sixth fund, helped in large part by an unnamed anchor investor.

The versatile fund will cover pre-seed to growth capital stage financings, and will consider an array of technology investments, from Internet and media to semiconductors and renewable energy, as well as drug development and medical devices.

Pitango ultimately hopes to hit $250 million, though founder Rami Kalish acknowledges that the poor state of Israel’s economy could hinder fundraising.

The firm’s last fund, raised in 2007, closed at $330 million.

Since its establishment in 1993, Pitango has backed more than 100 Israeli companies, many of which straddle the Israeli and U.S. markets.

These include Kaminario, a solid state storage developer founded in Israel, but now based in Massachusetts, which secured $25 million from Pitango and other investors in a late-stage June 2012 funding.

Private Investment Returns to CEE

Central and Eastern Europe (CEE) became significantly less reliant on government money for its private equity fundraising in 2011.

A study by the European Private Equity & Venture Capital Association (EVCA) shows that only 14% of the €941 million ($1.2 billion) raised in 2011 came from public funds, compared to 59% the year before.

Having barely touched the CEE market in 2010, banks and pension funds represented a quarter of total fundraising in 2011, as did fund-of-funds—the single largest institutional contributor.

“This probably reflects greater comfort with the region due to strong macro-fundamentals, particularly in Poland, and because GPs active in CEE are continuing to identify attractive companies,” Jacek Siwicki, president of Warsaw-based private equity firm Enterprise Investors, told VCJ.

Almost half the capital raised went to buyout vehicles, while venture funds attracted €229 million ($288 million).

Although private equity and venture fundraising in the region grew almost 50% from 2010 to 2011, investment fell slightly to €1.24 billion ($1.56 billion), as a result of fundraising collapsing between 2007 and 2009, from €4 billion to €400 million ($5.2 billion to $520 million).

Nonetheless, a return to pre-crisis highs is imminent, according to the Emerging Markets Private Equity Association, which reports that CEE fundraising hit $2.5 billion in the first half of 2012.

Impact First Sees Money in Social Returns

Slotting in somewhere between philanthropy and conventional venture capital, a new fund targeting “socially-driven” tech companies has been launched by Impact First Investments.

The Kfar Saba, Israel-based firm want to raise $25 million in 12 months and is planning a first close at $5 million before the end of 2012.

“The fund aims to return principal-plus to investors while achieving the highest possible social return on its investments, which will be in blended-value high-tech companies aimed at solving global social, medical, educational, and environmental challenges,” Jordan Feder, a principal at Impact First, told VCJ.

Investors in the fund are likely to be philanthropic foundations as well as family offices, banks and rich individuals interested in social investment, Feder says.

The fund will make equity investments of up to $500,000 in very early-stage rounds, and will set aside debt or equity to invest up to $5 million in follow-on financings, though Impact expects its average investment per company to be nearer $2.5 million.

Compiled by Alex Derber