Lycian Capital aims to raise USD 100m, expects first close in Q4

Erdinc Ergenc
03 September 2021

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Lycian Capital, a new private equity firm focusing on the lower-mid-market segment in Turkey, is raising USD 100m for its debut fund and is expecting a first close in Q4 this year, according to co-founder and managing partner Gökhan Arıkoç.

The founders are setting up an entity in Luxembourg that will hold the main fund and also allow the GP to expand its investor base. The firm has also set up a feeder fund in Turkey, which is regulated by the Capital Markets Board of Turkey and acting as a pooling vehicle for Turkish investors.

Soft marketing for the fund kicked off in Q3 and, concurrently, the Turkish feeder fund was registered and launched in August, Arıkoç said. Lycian is currently receiving commitments from investors in Turkey and expects to reach a first close for the feeder fund in Turkey in Q4 2021, he added.

Following this, Lycian expects to reach a first close for the main fund in Luxembourg in Q1 next year, with a hard-cap set at USD 150m.

The fund's primary investment focus is making growth capital and buyout investments in a diversified portfolio of companies. It is expected to have a lifespan of 10 years and two one-year extensions. The fund will target lower-mid-market opportunities; while technically a generalist fund, the GP has a "strong preference" for technology-enabled, scalable businesses and industries leveraging Turkey's competitive advantages, Arıkoç said.

Lycian plans to have an investment sweet spot of between USD 5m and USD 15m per transaction, and will co-invest for transactions up to USD 30m, Arıkoç said.

The fund will typically acquire majority positions, but may selectively take minority ownership where it obtains key rights, Arıkoç added. The fund intends to build a portfolio of 10-12 investments in total, executing two to four transactions per year.

The GP expects to make investments immediately after it reaches its first close, Arıkoç said. There is a "robust pipeline" and the firm has reviewed around 300 opportunities to date, he added. Lycian is in the due diligence phase for one project and three other non-binding offers were extended, with two to three more to come.

"We have an additional 10-15 opportunities in the immediate pipeline as well, and expect to deploy the fund relatively quickly," Arıkoç said.

Lycian was founded in 2020 by Gökhan Arıkoç and Gokce Manav, subsequently joined by partners Gokhan Kademlioglu and Pınar Ozbozdoganli and a further team of advisory board members.