Karmijn Kapitaal holds final close on €50m

Karmijn Kapitaal I has already made a name for itself with its unusual investment strategy: the vehicle will invest only in companies with diverse management teams, where at least a quarter of the management is female.

"We felt that there is a big disconnection between female entrepreneurs and the financial world," says Karmijn partner Cilian Jansen Verplanke (pictured, far right). "With many of the companies with female owners or CEOs, you will see that private equity is less represented in their shareholder base.

"As three women coming from the financial world, we wondered why this was. We thought a lot about whether we would be able to close that gap. There is a lot of research that states that if firms are led by diverse management teams, they perform better and outperform their sectors, so we thought this would be a very successful strategy."

Jansen Verplanke says the firm found the fundraising process "extremely interesting and challenging" and likened it to a boxing match. "All the time, you get those hits when you hear 'no', but you have to get back up and keep going. You have to deal with them and figure out how to make a 'no' a 'yes'."

The firm's three partners all have established careers within the private equity industry. Jansen Verplanke and fellow partner Désirée Van Boxtel (pictured, far left) worked together for four years at ABN Amro before founding Karmijn in 2010. The firm's third partner, Hadewych Cels (pictured, middle), has a background in turnaround investing. Karmijn recently hired its only male employee, investment analyst Gregor Rossen.

Karmijn actively sources approximately half of its investments itself, but will consider investments brought by advisers. According to Jansen Verplanke, the firm has already been approached by a number of companies seeking investments. Karmijn tends to steer clear of auction processes, Jansen Verplanke says.

The fund has a lifespan of eight years plus two one-year extensions. The investment period of Karmijn Kapitaal I is five-plus-one years. The firm did not use a placing agent for the fund.

Terms and conditions for the fund are described by Jansen Verplanke as European standard.

Investors
Karmijn Kapitaal I has a total of 60 investors, the majority of which are domiciled in the Netherlands. Other LPs of the fund are based in Luxembourg and Malta.

The European Investment Fund is the vehicle's cornerstone investor, having committed a third of the total fund amount. The Dutch Venture Initiative is also a backer of the fund, alongside several family offices. The vehicle also includes a GP contribution.

Interestingly, around 50% of the fund's investors are female. Jansen Verplanke says several of the commitments made by family offices in the fund are represented by the daughters of the family-office owners.

Despite the challenges faced by Karmijn while the firm was fundraising, Jansen Verplanke says the majority of both potential and committed LPs were very enthusiastic about the fund's niche strategy. She adds that many institutional investors were on the verge of committing to the fund but their mandates would not allow them.

Investments
Karmijn Kapitaal I will invest exclusively in Netherlands-based companies with a minimum turnover of €5m, a minimum EBIT of €500,000 and at least five years of operating history.

The fund plans to make two to three investments per year and has no specific sector focus, says Jansen Verplanke. "We're a diversity fund, so we only invest in companies that are led by both men and women. If we exclude certain sectors then our pond to fish in is going to be too small." However, Karmijn Kapitaal I will not invest in the biotechnology and real estate industries.

The fund will invest growth capital and acquisition finance as well as execute buyouts, including management buyouts and buy-ins. Equity tickets from the fund will be in the range of €2-7.5m and the vehicle will take part in deals ranging in transaction value from €5-50m, co-investing with other firms for larger investments. Around 10-15% of the fund will be set aside for follow-on funding for portfolio companies.

The fund's exit strategy will be focused predominantly on strategic buyers and on secondary buyouts. As Karmijn Kapitaal I is seeking to invest in the small-cap to lower mid-cap market, the firm sees chances to sell the portfolio companies to private equity players operating in the mid-market space.

Karmijn Kapitaal I has already made three deals. The fund's first investment took place in April 2012, when it acquired Enrico, a Dutch wholesale distributor of Mediterranean food products.

The vehicle then acquired a minority stake in Amsterdam-based YouMedical in December last year as part of a management buyout. The firm completed its third investment in August when it bought Dutch lingerie firm MD Group out of bankruptcy, alongside the founder and former owner, Marlies Dekkers.

The firm has three more investments currently in the pipeline, one of which Karmijn is in the process of finalising and plans to announce in the coming weeks.

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