Segulah closes 5th fund on SEK 2.4bn, short of initial target

Segulah V's total commitments are also less than half of that raised for the GP's previous fund, Segulah IV, which closed on SEK 5bn in October 2007.

The final close of Segulah V comes eight months after the fund held its first close, when an amended form D filing with the SEC showed SEK 1.9bn had been raised towards the vehicle's target.

Co-managing partner Henrik Lif told unquote" the firm was at a turning point after he and co-managing partner Sebastian Ehrnrooth took the reigns late last summer from interim managing partner, founder Gabriel Urwitz, following the exit of former managing partner Christian Sievert a year prior.

Segulah is a very different animal today, compared to two and half years ago, according to Lif, who views Segulah V as the first fund of "Segulah 2.0" – rather than Segulah's fifth fund.

Lif said he believes Segulah began fundraising too early for Segulah V and did not have the momentum needed in the wake of the management changes, which had raised questions among LPs. During fundraising, the GP's experience was that some investors felt the changes created too much uncertainty about the future direction of the company.

While the final close announcement came this week, Lif says fundraising had effectively been closed a few months after he and Ehrnrooth took over last year, with a few LPs in the process of committing having requested to delay final closing until 2016 for internal reasons.

Placement agent MVision led the fundraising effort for Segulah. The fund follows market standard terms, conditions and lifespan.

Investments
Segulah V will follow the same investment strategy of the GP's previous four vehicles, though with a smaller equity ticket remit, investing in Nordic companies with enterprise values of up to SEK 1bn.

According to Lif, the fund is around 40% deployed already and he expects the fund's capital will be deployed at the same pace as previous vehicles. Given the smaller size, the fund will be fully committed more quickly, and the GP is likely to return to the fundraising market sooner as a result, with a track record built by the new organisation.

The fund has been tapped for four investments to date: Nordic gadget and electronics retailer Teknikmagasinet, interpretation services business Semantix, medical software developer Hermes and Stockholm-based construction company Zengun.

The strategy of Segulah V will not differ substantially from Segulah's previous vehicles, as the GP has retained the same number of investment professionals despite some replacements in the team.

The smaller fund size will open up for more co-investment opportunities and the GP is already working on bringing potential co-investors on board. Lif said it will seek to bring co-investors in early in the deal process, rather than after closing.

The GP also said the reduction in available equity would not influence deal leverage levels.

Investors
LPs in Segulah's new fund include US and European institutional investors. Lif told unquote" that the GP, investment advisory team and associated vehicles had made a significant commitment to the fund, substantially above the typical 1.5% of the fund's size.

Investors include BlackRock, M&G and local LPs with a long-term relationship with Segulah. Lif said the investor base was a mix of old and new, where the existing backers that re-upped for Segulah V on average doubled up their commitments to the fund, while other previous backers had expressed desire to wait for the new team to build a track record.

Minimum LP commitment was around €5m.

People
Segulah – Henrik Lif, Sebastian Ehrnrooth (managing partners).

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