BPE holds first close for BPE 4 on €122m

The GP expects to hold a final close in February 2020.

P+P Pöllath and Partners advised on the fundraise for the Germany-based vehicle, which follows standard market terms and conditions.

Nikolaus Winther, a partner at BPE, told Unquote that the vehicle will begin deploying capital following a potential final deal from the firm's predecessor vehicle, BPE 3. BPE 3 held a final close on its hard-cap of €125m in February 2014.

Investors
The vehicle's LP base includes family offices, funds-of-funds, insurance companies and German entrepreneurs. Winther told Unquote that around 70% of total commitments came from German entrepreneurs, including managers from past BPE-backed MBIs. The vehicle received re-ups from approximately two thirds of the investors in BPE 3.

Unquote understands that the GP commitment will be more than 3% and that the minimum LP commitment was €500,000, with a reduced minimum commitment for former MBI managers. No single investor committed more than 15% of total volume to the vehicle.

Investments
The fund will typically deploy equity tickets of €5-15m, with flexibility to commit up to €25m in total equity for add-on acquisitions, according to Winther. The fund will hold back approximately 10-20% for add-ons or financing to support its portfolio companies.

The vehicle will follow a similar investment strategy to the firm's previous vehicles, targeting Germany-based Mittelstand companies with revenues of approximately €15-70m. Winther told Unquote that the GP will seek add-ons for its portfolio companies with lower revenue figures, such as an add-on of a company with €2-5m in sales revenues for a portfolio company with revenues of €20m.  

"We focus on the company's situation, not the sector," Winther said of the core strategy. "We look at succession problems in the SME space, especially situations where there is no successor within the company. Thus, we more often do MBIs as a succession solution, although we also do MBOs, as well as corporate divestitures."

Asked about the MBI process, Winther told Unquote: "In our experience, the main problem when people sell their companies is not getting the highest prices, since the market is there and they can get this, but rather finding a successor. They have often been trying for years and need a real entrepreneur to succeed them now."

Winther explained that BPE's MBI sourcing strategy is a key focus: "Finding adequate management teams or team members is one of the main tasks we perform with our BPE MBI initiative. They come from our network – we have done this for more than 10 years, so we are known in the market to be a firm that really focuses on MBIs. We have a network-driven approach of getting to know the people, followed by a more organised procedure of selecting the right candidates."

The GP has potential deals in the pipeline for the beginning of the investment period of BPE 4, according to Winther.

People
BPE Partners – Aman Miran Khan, Stephan Gummert, Nikolai Mackscheidt, Nikolaus Winther (managing partners); Andreas Odefey (advising partner); Raphael Nitz (investment manager).

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• Funds
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• BPE Unternehmensbeteiligungen (BPE Private Equity)