SwanCap plans October first close for Fund VI

The fund has a EUR 350m target and expects to follow the same strategy as its predecessor, Kreitmeier said. SwanCap Co-Investment Opportunities IV held a final close in September 2020 on EUR 303m. Swan IV is around 85%-90% deployed and is trading at 1.4x money and 20% IRR.

"We have a strong indication on re-ups from our existing investors and could add some new names, too," Kreitmeier told Unquote. "Even if we were to end up raising around EUR 400m plus, we could still follow the same proven strategy in terms of portfolio construction."

Swan VI expects to make around 35 direct co-investments. The GP plans to build a diversified portfolio for the fund across aspects including industries, GPs, investment years, geographies, underlying deal size, and investment strategies. It will work with sponsors in Europe and North America, focusing on the mid-market.

"Our pipeline looks pretty strong in the US and Europe, which allows us to be highly selective in our investment approach," Kreitmeier said. "Looking at our typical three-year investment horizon of our co-investment programs versus the number of compelling investments we see, I don't see any bottlenecks."

"Whilst we are certainly in a different environment now versus for Fund IV, our investment approach does not change," he added. "Our investment strategy – ever since – has a strong focus on capital preservation, high quality assets and value creation. That's true for the predecessor fund as well as Fund VI. Clearly on a more micro-level / deal-level, we do reflect the new realities in our due diligence processes and have a stronger focus on areas like supply chain, pricing power or energy and commodity prices etc. But in terms of compelling opportunities, we see a good pipeline."

While SwanCap and its portfolio are not directly exposed to the effects of the war in Ukraine, the GP is staying vigilant regarding the indirect impacts of the situation.

"Every industry sector has indirect exposure, and we have historically tried to stay away from sectors that are more overexposed to cycles or companies that don't have the sustainable competitive advantage to, say, handle and pass on higher energy prices or input costs," Kreitmeier said. "We have never lost an investment over the past 10 years, which is also testament to our philosophy and focus on capital preservation."

Since its formation, SwanCap has invested more than EUR 1.5bn in its co-investment deals, generating an overall TVPI of 2.0x and 21% IRR (including unrealized deals).

"We have done more than 120 coinvests and we are flexible in terms of when we come into the deal – we can come in via a co-investment syndication or underwrite a transaction directly with the sponsor," Kreitmeier said. "In many cases, we do the latter, where we are together with the sponsor and we co-sign. This puts us on the list with our GPs, they know we can do the work and work with them through the process as a partner."

The GP alternates between funds-of-funds and coinvestment funds in the strategies that it raises. The firm held a final close for Swan V in May 2022 on EUR 420m, as reported.

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