Beyond Capital holds final close for second fund on €115m

Beyond Capital Partners Fund II had a target of €100m. Triago acted as placement agent, while Clifford Chance provided legal advice.

Asked about the timeline of the fundraise, Christoph Kauter, managing partner at BCP, told Unquote: "The fund launched in H2 2019 and the first close took place mid-August 2020, in the midst of the pandemic, which was a challenge. But ever since that, we have been on track – we had commitments already locked in in early January, followed by the regular paperwork afterwards."

"Given the fact that this is our second fund and as an emerging manager, we had good traction in the pandemic and achieved a first close followed by a final close half a year after – that speaks positively about how we are viewed," Kauter added.

The GP's debut fund held a final close in May 2017 on €25m. Asked about the transition between the two funds, Kauter explained that Fund II has a broader LP base and was raised on the back of the GP's track record from its first fund. "We had one family office who was the sponsor in Fund I and also contributed to Fund II. The first fund was intended to be open to the institutional world, but we found one family office who appreciated our track record, investment style and small-cap niche, and was keen to become an anchor investor, with the condition that we would start and continue to invest their commitment and stop fundraising. The question was whether we would go for this, or spend another year or so hunting €100m. We decided to take the €25m and prove what we had promised, and now we have a second fund with €115m."

With a larger fund, the firm has also made new hires in recent months, Kauter said. Philipp Ruppert joined the team as CFO, following 23 years with Deutsche Bank. The firm also hired David Kyratsas as a senior investment associate, effective since 1 April. Kyratsas has experience in KMPG's corporate finance division and EY's transaction advisory team. "We will also hire one additional team member, who will join at the end of September as a senior investment director; this will give us a team of eight investment professionals," Kauter said.

The GP has made two exits from its Fund I portfolio. BCP sold IT management software distributor Ebertlang to HQ Equita in March 2019, followed by the sale of IT equipment distributor Sysob to UK-based market peer CMS Distribution.

BCP acquired lighting technology distributor LDBS in September 2015. "LDBS has had a good recovery and is now positioned more strongly than ever, so there will be a good chance to exit, potentially at the end of next year, having shown one normal business year," said Kauter. "On the buy-side, if I saw a business with a dip during Covid-19, I'd just want to see in hard figures that it could be recouped in positive numbers, not in hypothetical adjustments. If one can prove this, there is a fair chance to get one or two more multiples on an exit."

The second remaining portfolio company in Fund I is music event organiser BigCityBeats. "It was always part of the strategy to keep BigCityBeats for four to five years, to load up the value of the brand and global partnerships for festivals," Kauter said. "Music festivals might take some time to come back, although they definitely will come back. So far, we have been focusing on teaming up with additional partners, signing mid- to long-term contracts over three to five years, which will start from the end of this year and early next year. We have also won two sponsorship contracts that are independent of whether the festivals are taking place. The management team have our full support. Even under the normal modus operandi for a company like this, cashflow is not on a monthly basis – there are peaks, and you have to understand the core business as an investor."

Investors
The fund has around 10 LPs. Kauter told Unquote that 90% of the fund's capital was contributed by European funds-of-funds, the majority of which were new investors, in addition to the family office that backed the firm's first fund.

Investments
BCP II will continue the strategy of its predecessor, investing in DACH-based, asset-light SMEs. The fund will deploy equity tickets in the €5-15m range and its typical targets will have revenues of €10-50m and EVs of up to €35m.

The fund intends to make six to eight platform investments, with additional add-ons as part of the growth strategy for its portfolio companies. The fund currently has two portfolio companies. BCP acquired optician chain Klein aber Fein (formerly Ounda) in June 2020, and is pursuing a buy-and-build strategy for the company; it now has 60 locations in Germany. Fund II acquired its second portfolio company in December 2020 by buying security systems business Xortec.

"We have a good and active deal pipeline and we will likely have a new portfolio company in the next two to three months. We have already reviewed 60 companies in the year to date," said Kauter. "The SME segment has a lot of dealflow, compared with the mid- and large-cap markets. The quality of the companies in the past years in the German-speaking countries is good, and the sell-side advisers are doing a good job in our sector, which can make a big difference."

In spite of the active market, BCP will continue to review potential portfolio companies in line with its investment strategy, as opposed to investing opportunistically, Kauter told Unquote. "We don't do deals just for the purpose of doing them and we avoid an opportunistic approach. Our GP commitment is much larger than the 2% market standard and we want to invest in companies where we are 100% convinced that it is a home run – if we find out in due diligence that an investment might not materialise well, we will not go for it."

"In 2021, we will probably make one more platform investment and one or two additions to the existing portfolio companies," said Kauter. "Then next year and the year after, we will make two to three investments per year, so the fund will be invested in the next three and a half years."

People
Beyond Capital Partners – Christoph Kauter (managing partner).

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Buyout
• DACH
• Germany