Investors have flocked to mid-market European buyout firm Industri Kapital's sixth fund, which has closed with total commitments of €1.675 billion ($2.4 billion), more than double the previous fund, Industri Kapital 2004 Fund.
The final close marks the last chapter in the firm's rehabilitation after investors gave the firm a bloody nose on its previous fundraising. Then the firm's ambitions to join the mega buyout firms exceeded investor appetite and instead IK had to settle for a more modest €825 million fund. However, investors that stuck with the firm have been amply rewarded.
According to Mads Ryum Larsen, IK's partner for investor relations, the 2004 fund has already paid out in full. He said: “We have had four years of massive realisations. The 2004 fund already looks stellar. We have had three exits returning a total of €986 million on a cost basis of €129 million. That is a multiple of 7.6 times. We have called down €700 million in commitments. It has been a big turnaround.”
An investor in the fund said: “Three times the money already looks like the worst that fund can do. If the rest of the portfolio comes close to the first exits it will be spectacular.” Over the last 12 months IK has made 4 investments and 10 realisations generating approximately €1.8 billion for investors.
The fundraising also marks a changing of the guard. Björn Savén remains chairman and chief executive with a broad base of younger partners beneath him. However, Kim Wahl, deputy chief executive as well as one of the firm's founders, is retiring. Anne Holm Rannaleet, partner responsible for knowledge management and with the firm since inception, originally as finance director, is also departing.
The latest fund was significantly over-subscribed by both existing and new investors, effectively closing in the summer, three months ago. Larsen said: “We agreed a hard cap and we stuck to it. It was obviously tempting. But demand would have tailed off as the fund grew. So we were disciplined and stuck to the mid-market focus.”
IK could pick and choose its investors, which include Pantheon Ventures, Standard Life, HarbourVest, bcIMC, Skandia, SVG, Partners Group, Länsförsäkringar, Varma, Metlife and Tapiola. New York State Teachers Retirement Scheme and AIG were both new investors.
The Industri Kapital 2007 Fund will continue to execute the same industrial development strategy successfully deployed in previous funds.
The fund will target companies where IK, in partnership with management, has identified specific growth opportunities and can use its longstanding industrial knowledge, experience and network, to accelerate growth and create value both organically and through acquisitions.