Mergers Market: Fidelium Partners closes first EUR 103m fund; in talks with targets

German private equity house Fidelium Partners has closed its first fund and has a total of EUR 103m to spend on acquisitions, Managing Partners Rafal Grabarkiewicz and Dominik Beck said.

Fund I’s final closing was in April and it will focus on special situations, corporate carve-outs and turnaround investments, Grabarkiewicz said. It did not use any placement agents. It has worked with legal advisers K&L Gates in Munich, and will do so again, they said. The fund has a maximum six year investment period, and the fund life is 12 years, though this is flexible, Beck said. It will aim to make one investment this year, Grabarkiewicz and Beck said. By 2018 it will aim to be making two to four acquisitions per year, they said. It wants to build up a portfolio of 10-15 companies, Grabarkiewicz and Beck said. It is assessing indicative bids and looking at between 10-12 targets, they said.In terms of sector it will look at industrials, automotive, chemicals, consumer goods, and TMT/business services, Grabarkiewicz and Beck said. Its average target will generate between EUR 30m – EUR 500m revenue, and is likely to have profitability below sector average as an underperformer, they said. It will look at equity tickets up to EUR 20m, they added. Fidelium will invest a minimum of 75% majority stake, Grabarkiewicz and Beck said. Investments will be equity funded investments without leverage or debt financing, they said.

Targets will be companies with a healthy core business that can improve valuations through operative support, Beck said. It will find solutions forunderperformers that could do with a better management team, for example, he added.Its investment focus will be on entrepreneurial families, old economy firms, and those facing succession issues, as well as looking for add-ons for buy and build strategies, they said. As a business it is not so exit-driven since this is variable with special situations, they said. Instead it will aim to make companies profitable over a space of two to six years, they added. Geographically it is targeting all of Europe, and particularly the DACH region, France, Spain, Benelux, Scandinavia, and the UK, they said. Fidelium competes with other funds like QuantumAurelius, Orlando and Palero, they noted. It wants to look at unusual and challenging situations, making firms operate better, they added.

Grabarkiewicz was previously Managing Director at Aurelius, and Beck Managing Partner at Quantum. Fidelium’s objective is to make companies profitable, invest and raise profit margins, and reduce costs. For example, it could look at business building for carved-out non-core corporate assets. The fund was founded in 2017 and is headquartered in Munich. It has five employees, which it aims to increase up to ten in the next year. It also has plans for an office in southern Europe, they said.

By Emma-Victoria in London