LONDON/FORT LEE, N.J. – Geocapital Partners’ first dedicated European fund exceeded its original $50 million (GBP30 million) target by $3.7 million at its first close in December.
The vehicle, focused on small, established European computer software and information service companies, will hold a final close on a maximum of $70 million to $75 million in the early months of this year.
Geocapital has appointed Colin Amies, previously a partner with Advent Limited, and Nic Humphries, formerly of Barclays Private Equity, as general partners of Geocapital Europe. Regent Associates, the United Kingdom-based specialist M&A adviser to European information technology companies, is acting as the fund’s specialist general partner and will provide assistance with deal flow, industry evaluation and local knowledge, as well as support with exit opportunities.
Broadview Associates, another specialist adviser to the IT sector, fulfilled a similar role in Geocapital Partners’ earlier United States funds before shifting its focus to larger transactions that fell outside Geocapital’s traditional province.
Subsequently, Broadview linked with Electra Fleming to address investment in the European IT market through the Kennet Capital joint venture.
“Regent, which is now much the same size as Broadview was when Geocapital linked with them in the U.S., is a highly appropriate associate for our planned activities in Europe,” Mr. Amies said. Regent has offices in France, Germany and Italy, as well as in India, Israel and the U.S., while its links with IDG Group, which has offices throughout Europe, extend its coverage of the Continental markets.
Geocapital Eurofund is allowed to invest anywhere in Europe, but Mr. Amies emphasized that it will not specifically target investment in Eastern Europe or the less developed Western European venture markets. The managers initially will concentrate on U.K. opportunities, expanding their activities stage by stage into other markets with established venture capital modes, particularly Germany, France, the Netherlands, Benelux, Ireland and Scandinavia.
The fund will avoid start-up investments, focusing on active businesses in the computer software and information services sectors. Internet services are likely to be a particular focus for the fund. Few, if any, investments will be made in hardware companies, which Mr. Amies said are incidental to Geocapital’s strategy.
Geocapital Eurofund normally will provide between $1 million and $5 million of equity to investee companies in venture or development capital situations.
Mr. Amies said that while a few pre-IPO fundings might be included in the fund’s portfolio, the bulk of its investments would feature companies at an earlier stage of development. Geocapital Eurofund will not use leverage in its investments.
Investors signing up for the first close included several limited partners in earlier Geocapital U.S. funds, among them INVESCO Private Capital, GTE Corp. and Sovereign Financial Services Inc. U.K. participants include Candover Investments, West Midlands Pension Fund and Westpool Investment Trust, all of which are new to Geocapital, along with several private investors. Mr. Amies reported that the capital from the first closing was weighted toward the U.S. Geocapital Eurofund is encountering continued strong interest from investors, but Geocapital does not plan to increase the cap it has set, given the investment parameters of the fund.
Geocapital also closed Geocapital V, its latest U.S. fund, on $225 million in December, taking total capital under management to around $500 million. Geocapital’s previous U.S. funds, which have achieved consistent top quartile returns, have made four investments in the U.K. Taking the new U.S. fund into account, Geocapital Partners has the capacity to invest more than $100 million in the European IT sector.