Project A steps up PE co-investments, promotes Rösler to partner

Rösler joined Project A in 2015 and has prior experience with Rheingau Founders and software platform Itembase. He joined the firm's investment team in 2019 and previously held roles at Project A including chief commercial officer.

In his new role, Rösler will lead the firm's private equity investment practice alongside general partner Ben Fischer, who joined the firm in 2016 following 14 years' experience with Bain & Company.

Project A typically makes early-stage technology investments in technology-based companies, but has also been developing a PE co-investment strategy in parallel for several years. "We have been doing this for almost six years now, but it has been a little under the radar," Rösler said. "What differentiates Project A as a VC is our strong operational base: we have 120 people on our team working exclusively for our portfolio. A lot of classic PE firms are seeing more and more digital dealflow as companies are becoming bigger and profitable, and these classic mid-cap buyout funds would often benefit from this expertise."

Project A entered into its first deal in the strategy following an inbound approach for technology expertise. "The first one we did was with EQT, who approached us to assess the company in due diligence, to see if it had potential," Rösler said. "We did this as a favour initially, but when they wanted our team to help operationally, we knew that we needed to peak to our team and our LPs to be able to do this."

The strategy benefits the firm's LPs by giving them exposure to this dealflow, according to Rösler. "Our LPs are looking for outsized returns, and we have a ratchet component in our deals to get us above typical 2.5x-3x buyout returns. We discovered that this was a good model – the lead investor has a fully aligned expert on board, and we make returns at the time of the exit."

Project A held a final close for Project A Ventures III in September 2019 on EUR 180m. "Until now, we have made these investments from our flagship funds," Rösler said. "For Fund II and for Fund III, we set a fixed allocation into PE for each fund. But we are expecting to make further announcements on the funding for the strategy in a couple of months' time."

Doubling down on dealflow
Project A can deploy equity tickets of EUR 4m- EUR 10m per deal, generally backing European companies with enterprise values of EUR 80m- EUR 100m. However, the GP can back smaller deals where it sees buy-and-build potential, or larger deals of up to EUR 500m, Rösler told Unquote.

The firm now expects to make two to four co-investment deals alongside its PE partners per year. Project A has previously participated in 10 buyout deals but will now also look at growth capital deals in which the lead investor is taking a minority stake, Rösler said.

The firm made its first growth capital deal from the strategy in January 2022, investing in a EUR 30m round for customer experience platform Yoummday alongside Armira Growth. The GP has previously invested alongside GPs including 3i and Triton, according to the statement, and its portfolio also includes dental prosthetics producer Amann Girrbach (a portfolio company of Capvis and Partners Group) and 3i-backed lighting retailer Luqom Group.

"What limits us from doing more deals is just the operational support capacity – we want to make sure that we can deploy significant resources from our operational team when we invest, but can't support 10-15 companies per year in this," Rösler said.

Projec A expects its private equity co-investment team to grow as the strategy develops, Rösler told Unquote. "We have made one hire and are looking to add a fourth person this year," he said. "We have around eight to 10 people in core VC investment team and we draw a lot on our operational teams."

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