European Fund News, February 2011

Holtzbrinck Boosts German Seed Scene

Holtzbrinck Ventures, the early stage investment arm of German publishing group Holtzbrinck, has closed its fourth venture fund at €177 million ($236.5 million)

HV Holtzbrinck Ventures Fund IV will continue the three previous funds’ focus on startup digital media and internet companies, predominantly in German-speaking countries.

“There isn’t sufficient capital provision for early stage Internet companies in Germany,” Holtzbrinck Ventures Partner Martin Weber told VCJ.

“However, it’s much easier to get in at the seed stage with these companies, where the scaling is so much faster, than to enter later,” he added.

The firm will make seed investments of about €500,000 ($668,000) while follow-on rounds could rise to €7 million ($9.3 million), Weber sai0064.

The firm’s exits include the $200 million sale of brands4friends to eBay in late 2010 and the sale of book retailer in 2009 to John de Mol, the creator of the TV series “Big Brother.” Capital for the latest fund was raised from parent Holtzbrinck and new investor HarbourVest, the international private equity firm and secondaries specialist, with each limited partner contributing roughly 45% of the fund, and the venture management team accounting for the remainder.

Montagu Closes on €2.5B Target

London’s Montagu is on track to complete Europe’s largest private equity fundraising since the financial crisis, holding a first close of it latest buyout fund at €2 billion ($2.7 billion), according to the Financial Times.

The fund is targeted at €2.5 billion, €250 million more than Germany’s Triton raised in early 2010.

“We started raising this fund 42 months ago. It has been no easier or harder than it has ever been,” Montagu chairman Chris Masterson told the FT.

So far, 80% of capital has been sourced from existing investors, although HSBC, which owns one-fifth of Montagu and is expected to contribute 5% of the fund, has yet to commit.

Montagu has realized a string of investments since 2009, returning €1 billion to investors in the process.

Montagu raised €2.25 billion for its previous fund, which was raised in 2005.

Global LPs Underpin New Perceva Fund

Paris-based turnaround specialist Perceva Capital has raised the €150 million ($200 million) for France Special Situations I after a number of reverse inquiries from limited partners.

A total of 15 institutional investors from France, the United States, Europe and Asia contributed to the fund, including French long-term public investor Caisse des Dépôts, U.S.-based PE firm Adam Street Partners and Japan’s Nomura bank.

Fundraising began in February 2010.

“We recognized in 2010 that banking regulations were becoming more stringent and wanted to diversify away from a single investor like Nomura,” Perceva President Jean-Louis Grevet told VCJ.

Perceva is targeting about 12 French companies facing operational or financial challenges over the next five years, and it expects to add two or three to its portfolio in 2011.

The fund has already invested in Trailor ACTM and Dalloyau, representing about 15% of the fund.

North West Fund Ready to Invest

The United Kingdom has opened one of Europe’s largest state venture funds in a bid to boost private sector employment in a region heavily reliant on a shrinking public sector.

The North West Fund is a £185 million ($295 million) evergreen fund for businesses in Northwest England, aimed at creating or saving 14,000 jobs in the region through 2015.

Six fund managers will administer the fund under contract with North West Business Finance, which is tasked with its delivery under the European Investment Bank’s JEREMIE initiative.

The fund managers will also seek to raise an additional £200 million ($317 million) from private and institutional investors.

AXM Venture Capital will invest £15 million in digital and creative industries; CT Investment Partners will channel £29 million into energy and environmental projects; Enterprise Venture will loan £30 million; FM Private Equity has been allocated £45 million; FW Capital is responsible for £35 million; and Spark Impact will oversee £35 million of loans to life science companies.

The remaining £15 million sits as a reserve allocation for when further investment needs become apparent.

Healthy Progression for Capricorn

Ahead of its planned merger with fellow Belgian firm Quest Management, Capricorn Venture Partners has held a first close of a new health-and tech fund (CHF) at €42 million ($56.1 million)

Investors include Dexia Insurance Belgium, Belgian state investor FPIM, Société Régionale d’Investissement de Wallonie, Quest Management’s quoted and unquoted investment fund, Quest for Growth, and two universities, KU-Leuven and the Université de Liège.

“We are pleased to have closed CHF at this level in an environment of unprecedented difficulty for raising European venture funds,” said Chairman Edwin Moses.

The health-tech fund will target early to mid stage companies developing drugs and medical equipment and technology.

It is Capricorn’s fourth venture fund, following its €112 million Cleantech fund that closed in 2008.

Vendis Finalizes Maiden Fund

Vendis Capital, the Brussels-based firm spun out of retail investment company Mitiska in 2009, has completed its first fundraising at €111.5 million ($153.8 million), €11.5 million over target.

First close of the private equity fund was held in October 2009 at €55 million, with supermarket giant Colruyt as anchor investor.

Since then, Vendis has attracted 24 investors to the fund, which will target growth and buyout opportunities in European non-food retail and consumer businesses, investing between €5 million and €15 million ($6.7 million and $20 million).

Limited partners in the fund are split roughly 60:40 between family and institutional investors.

In 2010, the fund invested in Belgian fashion retail chain ZEB and in Dutch spectacle retailers Eyes & More; it hopes to add two more companies in 2011.

Mitiska’s former management team of Michiel Deturck, Luc Geuten, Cedric Olbrechts and Willem Van Aelten will manage the fund.