BID Equity Fund II holds final close on €125m

The Luxembourg-based fund was launched in February 2019 and held a first close in July 2019 on €80m.

Axon Partners was the placement agent for the fundraise, headed by a team including managing partner Dominik Meyer and head of project management Magdalena Nowak. P+P Pöllath + Partners advised on the tax and contract law aspects of the fundraise, led by Philip Schwarz van Berg. Luxembourg-based Arendt & Medernach set up the fund structure.

BID partners Axel Jansen, Helge Hofmeister and Lars Kloppsteck will manage the fund.

BID was founded in 2016 and had previously made a series of investments on a deal-by-deal basis, but BID Equity II was the firm's first fundraise.

Investors
The fund received a significant contribution from BID's management team. The LP base includes funds-of-funds, family offices, institutional investors and endowments. Approximately 5% of the LP base is made up of private individuals and entrepreneurs. The geographic base includes a significant percentage of German investors, plus investors from France, Spain, Switzerland and international investors.

Meyer told Unquote: "It was crucial to find an investor base that understood BID's proposition and who could also be a value-add in the long term, which is crucial as the firm builds its franchise. Possible co-investors and investors with industry insight were also important."

The fund follows market terms for management fees, carry and hurdle, and would require a market standard deployment to come back to market.

Investments
The vehicle seeks to invest in B2B software businesses in Europe, with a focus on the DACH region. The fund will invest in companies that it believes have buy-and-build potential.

The fund will aim to buy majority stakes in companies with EBITDA of €500,000-5m. The target companies should generate 60% of their revenues via their own products. The proportion of recurring revenues should be at least 50%.

The vehicle has an investment period of five years and will aim to make 8-10 platform investments, deploying €15m in equity per investment. The fund will also use leverage for its investments.

The investment strategy has been shaped by the background of the firm's founding partners. Axel Jansen previously led Boston Consulting Group's DACH region advisory activities, and fellow founding partners and BCG alumni Helge Hofmeister and Lars Kloppsteck have expertise in software and technology.

So far, the fund has invested in a majority stake in Germany-based software developer XClinical.

People
BID Equity – Axel Jansen, Helge Hofmeister, Lars Kloppsteck (partners).
Axon Partners – Dominik Meyer (managing partner); Magdalena Nowak (head of project management).

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