HPE targets year-end first close for Growth Fund III

Having fully deployed both Fund II and Fund I, the GP officially launched Fund III at the SuperReturn conference in Berlin in June 2022, the partners said. The first stage of the fundraise has been raised primarily from European LPs, they added. For the next stage, the GP will look towards the US and Southeast Asia, where the fund sees good traction in terms of potential LPs. The primary LPs across all regions will be pension funds, endowments, family offices, and fund of funds, the partners said.

The US and Southeast Asia are new markets for HPE. A lot of wealth, especially that stemming from technology, has been created in the Southeast Asia region as of late, and many family offices have emerged, creating a good opportunity to cover that area, the partners said.

While a certain date or quarter for a final close is tough to predict in the current market, the GP intends to follow the standard timeline, with a final close expected to come 12 months after the first close, in Q4 2023.

HPE has evolved from being a traditional, regional player in Germany and the Benelux region to become a sector specialist, investing in four verticals of software, fintech, healthtech and consumer internet, as reported.

Growth opportunities

The GP intends to commit EUR 40m at a time from the new fund, and is currently monitoring more than 10,000 companies via its proprietary sourcing platform, the partners said. Focusing on fast-growing companies with revenues of EUR 10m-EUR 100m, HPE looks for dynamic triggers and inflexion points such as changing patterns in recruitment, product launches and office locations.

The firm’s recent investment in e-commerce shipping platform Sendcloud was done in a “warehousing structure”, which means the deal will be rolled into Fund III on its first close, the partners said.

Exits from Fund I include PPro, which the GP transferred to a EUR 160m single-asset continuation fund in 2021, as reported. The GP has held a stake in the international electronic payments platform since 2014. While initial small partial exits have occurred from its second fund, HPE has yet to fully exit an investment from the vehicle.

Currently, HPE Growth see a strong rise of growth opportunities across digital health and digital climate technology. Despite this, as a sector specialist, the GP does not have a hard focus and treat all four sectors in its scope equally.

Last year, HPE Growth promoted Frederic Huynen to partner at the same time as Manfred Krikke’s promotion to co-managing partner alongside van Delden. By appointing partners early and by having an average age difference of around five years, the firm makes sure that all lessons are retained and that partners can fully commit to new funds, Huynen and van Delden told Unquote.

While some funds have been started by a group who are all at a similar stage in life, the partner team at HPE ranges from 34 to 60 years old, which in turns ensures longevity for the firm and the LPs.

Click here to read a GP Profile of HPE Growth on Unquote.com.

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