HV Capital forms EUR 430m continuation vehicle for 2010-2015 funds

Existing investments from HV IV, HV V and HV Coinvestment Fund will be transferred to the fund. These include Germany-headquartered mobility platform FlixMobility, Germany-based shopping rewards startup Global Savings Group, and UK-based payment platform SumUp. The fund will continue to invest in the transferred portfolio companies.

HarbourInvest has led the continuation deal, with LGT Capital Partners, Pathway Capital (which is re-investing), Holtzbrinck Publishing Group, and additional family offices and financial institutions also participating.

Campbell Lutyens advised HV Capital on the transaction.

HV Capital has formed four co-investment vehicles since its foundation in 2000. It held a final close for its latest flagship fund, HV Capital Fund VIII, in May 2020 on EUR 535m. The fund has made six platform deals, deploying equity tickets of EUR 500,000-50m. The GP added in the same statement that it is now gearing up for future fundraisings in 2022 and 2023.

The GP was an early investor in Depop, having first backed a EUR 2m seed round for the company in 2012; the online clothing and accessories marketplace was sold to Etsy in a USD 1.625bn deal in June 2021.

HV Capital said in a statement that IPOs are no longer viewed as the only source of capital for large growth investments, with investment horizons extended.

HV Capital's continuation fund is the largest to be formed by a European VC, according to Unquote Data. Continuation vehicles for portfolios and single assets have been increasing in prominence in the growth and technology segments as GPs look for alternative liquidity solutions and methods to hold assets for longer.

Other GPs that have taken advantage of the secondaries market to find liquidity solutions for themselves and their LPs include HPE Growth, which formed a single-asset fund for its stake in payments platform PPro in June 2021, led by Coller Capital and Adams Street Partners and with support from Pomona Capital and W Capital. Prior to this, US-headquartered healthcare growth investor Ampersand Capital Partners formed a USD 670m continuation fund for the three remaining portfolio companies in its matured funds in November 2020.

The formation of HV COCO Growth comes against the backdrop of a challenging IPO market for technology companies. While 2021 was a record year for PE-backed IPOs, with many technology companies growing at unprecedented levels during the coronavirus pandemic, 2022 has proved choppier, with concerns about valuations and inflation dominating. Companies that have publicly announced IPO postponements include online file transfer service WeTransfer, as reported. 

Although it may be too early to tell, VC activity in the technology sector is not yet showing signs of slowing, according to Unquote Data, indicating that technology-backed investments are here to stay in spite of current concerns. Although deal activity fell to EUR 1.2bn across 73 deals in November 2021 amid concerns about the omicron variant of Covid-19, VC activity in January 2022 reached more than EUR 5.2bn across 80 deals. Looking at the past two years on a monthly basis, this aggregate value was surpassed only by the EUR 6.5bn raised across 122 deals in September 2021.

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