Afinum nears EUR 410m-EUR 420m fund close; mulls new fundraise

Min Ho
16 March 2023

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German GP Afinum is “some weeks” away from closing its ninth fund at roughly EUR 410m-EUR 420m after a year and a half on the fundraising trail, Managing Partner and founder Dr. Thomas Bühler told Unquote.

The vast majority of investor base of Afinum 9 is of German and Swiss LPs, with a smaller number and amount contributed by international investors, Bühler said.

Following the close of the 2021-vintage fund and with deployment progressed "to a high degree", the firm will consider preparations for Fund 10, for which it could start fundraising as soon as mid-2024, he said.

"[Fundraising of Fund 9] took … longer than expected and longer than prior funds," Bühler said, noting that the challenging macroeconomic environment had some impact on the timeline.

While raising capital from its existing LP base took longer than predicted, those that decided to re-up have invested a higher amount than prior funds, he said.

Afinum has also been pitching its strategy to international LPs, including those in the US. Bühler acknowledged however that the process has been "complex", after having fielded questions such as issues around inflation in Europe, the war in Ukraine and currency volatility.

Succession plans
The upcoming close of Afinum 9 fund coincides with a succession planning at the GP, with senior partner Philipp Schülin and CFO Anton Bergmann now named as the new managing directors. The two new appointees will sit along Bühler and Managing Director and co-founder Gernot Eisinger, as reported.

Succession is a "daily business" for Afinum, which tends to acquire businesses from founder-owners reaching retirement, he said. It is therefore natural for the two founders, who will turn 60 this year, to consider the firm's next steps, he said.

"We saw quite some private equity companies in Germany where the founders got to 60-65 or older and did not plan for succession early enough, and so a lot of these companies disappeared from the market," he said. "This is exactly what we do not want. We have a responsibility to our investors, our team and our portfolio companies, so it's important to manage our own succession carefully and successfully."

Among the responsibilities that the new managing directors will take on are the upcoming fundraising, when the time comes, he said: "The whole management team, specifically the younger members of the management team, will intensely think about how to set up fund 10," he said.

Investments
Afinum, which typically invests in DACH businesses across sectors such as industrial and technology, healthcare and wellness and business services, has so far invested in six platform deals with Fund 9. The vehicle has dry powder for an additional six to seven platform deals alongside bolt-on acquisitions, he said. Deployment for the remaining platform deals are expected to come by towards the end of next year, he added.

The sponsor's pipeline is supported by the uncertain economic environment, which is leading to many founder-owners to consider their options, Bühler said.

On the exit front, the firm is looking to "fully divest" holdings from Fund 7 within the next 12 months, he said. For Fund 8, some of its portfolio companies have divested and there is an expectation that exits in the strategy will continue, he added.

Among companies still in its Fund 7 are Liftket Hoffmann, a German electric chain hoist specialist, whose sale process kicked off earlier this year, as reported. Display packaging portfolio company Iconia Group also remains in the portfolio after having attempted an exit in 2020, as reported.

Other portfolio companies in Fund 7 are industrial camera systems Kappa optronics and hosiery supplier ONSKINERY.

Fund 8 still has 10 unrealised portfolio companies, including Ledlenser, a German LED flashlight and headlamp specialist backed by Afinum and Invision, which is being prepped for sale, as reported.