Ex-Silverfleet team regroups with DACH-focused GP Sophora

Min Ho
12 September 2022

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A team of three former Silverfleet Capital executives has banded together to set up Sophora Unternehmerkapital, targeting small cap opportunities across the DACH region. Managing partner Benjamin Hubner speaks to Unquote about the GP’s fundraising and deal-making plans.

Launched last week after formalizing the fund structure in July, the fund is "now in the market" and "able to do deals right away", Hubner said.

The GP is in the midst of raising a blind pool from its network for its debut fund. Sophora is pitching its fund to potential LPs that include entrepreneurs, management teams and private investors, he said. However, he declined to comment on the fundraising target.

"We think that today's fundraising environment is not the best one to start off right away as an emerging fund," he said. "That's why should we have decided to go with a different route."

Once it has built up an investment track record, with full deployment expected over the next 12 to 18 months time, the fund could consider taking on institutional investors, Hubner said.

In addition to Hubner, the former Silverfleet trio comprises managing partner Jennifer Regehr and chairman Neil MacDougall. Two non-executive directors have also joined the group, namely Joop Heijenrath and Michael Matros, both of whom are partner and are responsible for value creation & sustainability, according to its website.

Silverfleet Capital called off the fundraise for its third institutional fund in 2021, as reported, citing "market circumstances". The GP is now focusing on follow-on investments for its existing investments and the wind-down of its current portfolio.

Buy-and-build expertise
Sophora will focus on small-cap companies operating in industrials, B2B services and technology across the DACH region. This focus plays to macroeconomic themes including energy transition and digitization, Hubner said.

The fund is expected to invest in three companies where it can deploy EUR 5m-EUR 20m per deal, although co-investment opportunities will be possible, he said.

Buy-and-build is expected to feature highly in the new fund, he said. While this is a common strategy among large and mid-cap buyout funds in Germany and the wider European private equity landscape, such a strategy is less common in lower-cap space in DACH, he explained.

"In the [DACH] small-cap segment, you see a lot of investors who are financing their deals on a deal-by-deal structure and not providing additional funds to roll out a buy and build strategy," he said. "They also normally don't have the process know-how of how to do that most efficiently."

The team's buy-and-build experience at Silverfleet should put Sophora in good stead in pitching its capital to potential targets as compared to its peers, he said.