Azimut-backed Lycian heads for debut fund first close in Q1 2023

Erdinc Ergenc
08 February 2023

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Turkish sponsor Lycian Capital is gearing up for a first close of its debut fund as it considers changes in its strategy and hard cap goal following the sale of a stake in the GP to asset manager Azimut, co-founder and managing partner Gokhan Arikoc told Unquote.

Lycian plans to reach the first milestone for the USD 100m debut fund by the end of March, he said, adding that Azimut and its network of institutional, retail and high-net-worth individual (HNWI) investors will become the major LPs in the vehicle, he added.

The deal with Azimut, which saw the European asset manager make a direct equity investment in the recently launched private equity firm at the end of last year, could also lead the GP to reassess the new fund's investment mandate and hard cap target, Arikoc said.

The initial vehicle will be domiciled in Turkey and regulated by the Capital Markets Board. Turkish legislation regarding private equity and venture capital funds provides significant tax incentives for LPs, Arikoc said. According to him, Azimut's Turkey operation is the largest independent asset manager in the country with USD 5.5bn in AUM in public markets.

Investments
Lycian's primary focus is investing in growth capital and buyouts, with its debut fund expected to have a lifespan of six years and two one-year extensions. It will target mid-market deals and, while technically being a generalist fund, it will have a "strong preference" for technology-enabled, scalable businesses and industries leveraging Turkey's competitive advantages, as reported.

Its sweet spot will in the USD 5m-USD 15m equity ticket range, while it can co-invest in transactions of up to USD 30m, Arikoc said.
The firm is holding talks to acquire two companies, expecting to close at least one in the first quarter of this year. Both businesses are leaders in their segments – the electric vehicle and the medical equipment spaces.

With a total of 20 companies in its pipeline, Lycian aims to deploy its war chest over the next three years and seek exit opportunities in the following three years, Arikoc said. The fund will typically acquire majority positions, but may selectively take minority stakes where it obtains key rights, Arikoc added.

Lycian was founded in 2020 by Gokhan Arikoc and Gokce Manav, each with more than 20 years of private equity and investment banking experience, acting as investors, board members and advisors to companies across a wide range of sectors. They were subsequently joined by partners Gokhan Kademlioglu and Pınar Ozbozdoganli and a further team of advisory board members. The firm expects to have 10 people in the investment team by the end of the year, Arikoc noted.