Genesis holds EUR 150m final close for GPEF IV

Harriet Matthews
07 June 2022

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Czech Republic-headquartered Genesis Capital has held a final close for Genesis Private Equity Fund IV (GPEF IV) on its EUR 150m hard-cap.

GPEF IV was launched in June 2020 and held an initial EUR 101m first close in summer 2021, as reported.

White & Case provided legal advice on the fundraise.

Asked about the timeline of the fundraise, Genesis Capital managing partner Ondřej Vičar said that the GP was able to hold a final close once it had onboarded a final investor key. "The reason for the gap between the closings that took place last year and the final closing now was the EBRD commitment," he said. "Historically they were one of our cornerstone investors, but they left the Czech Republic in around 2009, before re-entering over the course of 2021. We reserved them a space in the new fund and rejected all the other potential commitments."

Genesis Capital's previous flagship fund, Genesis Private Equity Fund III (GPEF III), held a final close in September 2016 on EUR 82m. The fund is currently focusing on making exits, Vičar said, adding that it is currently performing at more than 20% net IRR. The firm's 2009-vintage, EUR 40m GPEF II fund is fully realised, according to Vičar.

In addition to its buyout strategy, the GP also manages a growth fund, which held a final close in December 2020 on EUR 40m and targets companies with growth potential and enterprise values of up to EUR 10m.

The Prague-headquartered GP has doubled in size over the past five years with new hires to its team, Vičar said.

Part of this team development involved a focus on ESG. "We recently became a UN PRI signatory and we have established an ESG department in Genesis," Vičar said. "We are paying more and more attention to the topic, not only formally due to the regulations and requirement from LPs, but effectively in our portfolio."

Investors
The fund's final close was brought about with a EUR 15m commitment from the European Bank for Reconstruction and Development (EBRD). The fund is the EBRD's first commitment since its return to the Czech Republic, according to a press release from Genesis Capital.

There are 13 LPs in the fund in total including the EBRD, according to the same press release. GPEF III had seven LPs, meaning that the GP's investor base has almost doubled, Vičar said.

According to the press release, further LPs in the fund include the European Investment Fund (EIF), Česká spořitelna bank, and two insurance companies in the Vienna Insurance Group. Asset managers Amundi Czech Republic, Raiffeisen Investment Company, Sirius Investment Company and RSJ Investments have committed to the fund, as well as Swiss fund-of-funds Alpha Associates. INVL group pension funds and family office SPM Capital have also committed to the fund.

Investments
The fund will deploy equity tickets of EUR 5m - EUR 20m, investing in lower mid-market companies operating in B2B services, light and medium manufacturing, IT services, and specialised retailing and consumer-oriented services. Targets will typically have EBITDA in the EUR 2m - EUR 10m range, according to Vičar.

GPEF III deployed equity tickets in the EUR 4m - EUR 8m range, according to Unquote Data, meaning that the GP's new fund has more firepower than its predecessor. A further difference between the two fund generations is the amount of capital that GPEF IV can deploy beyond the Czech Republic; while GPEF III could deploy up to 20% beyond the country, GPEF IV can deploy 30% in in Slovakia, Poland, Austria and Hungary.

According to the statement, Genesis Capital generally invests in situations including succession solutions or where founders are seeking capital to grow or internationalise their business. It will also invest in carve-outs of non-core business units.

"We prefer to be involved in proprietary situations," Vičar told Unquote. "We see around 150 opportunities every year and invest in one to three of them. We like to be approached by any party with dealflow, including advisers."

The fund has not made any deals so far but expects to make 10-12 investments in total, Vičar said. The fund can make both majority and minority deals and is not limited in the number of minority investments it can make, he added.

"We need to pay much more attention to the macroeconomic factors than before, since everything is more uncertain," Vičar said. "But on the other hand, we tend to believe that it's more about the companies themselves than the macro picture. As long as we invest in high quality assets, we should be fine in the current circumstances."

The GP's recent deals include its acquisition of Czech Republic-headquartered electronics manufacturer HC Electronics, which it acquired via its growth fund. Its recent exits include the sale of pharmaceutical commercial services provider Quinta-Analtyica to LVA, a portfolio company of BBA Capital Partners, marking the latest exit from GPEF III.

People
Genesis Capital – Ondřej Vičar (managing partner).