Finatem launches Finatem V

Finatem V has a target of €150m. It was registered in November 2019, according to Unquote Data.

The GP took the decision to delay the fundraise due to the travel restrictions imposed during the coronavirus pandemic, as previously reported. "It did not make sense for us to raise in the pandemic – it's very important to see the investors in person," Kartje said. "But now that we are slowly getting back to normality, we can meet people. It's a question of trust, you need to meet personally and get a flavour of the people working for a firm, which is why we prolonged Finatem IV and are now launching Finatem V."

Finatem IV held a final close in December 2014 on €150m.

Asked about the timeline for the fundraise for Finatem V, Kartje said: "We expect that we will have our first close in H2 2021 and we will try to make the first investment then; we are already working on deals and have some interesting targets under review."

Investors
LPs in Finatem IV include German banks, family offices and asset managers, as well as the European Investment Fund, according to Unquote Data. BHF Bank has also committed to several Finatem vehicles.

Investments
FInatem V is to follow the investment strategy of its predecessor vehicles. "Part of our strategy is to identify mid-cap champions in the small-cap segment, as we have done with HGears," Kartje told Unquote. HGears listed recently on the Frankfurt Stock Exchange with a market capitalisation of €270m. Finatem acquired and merged two small-cap businesses in 2011 and 2014 to create HGears, and netted returns of 6x money and 25% IRR from the listing, as reported.

"We will stick to our targeted investment strategy," Kartje added. "We are growing the fund size just a little bit so we can stay in the small-cap business, where we see good opportunities to find companies with a USP that might lack management capacities that we can offer."

"We focus on consumer, services and industrials, which is where we have been successful over the years, and we see a big field for new opportunities there," said Kartje. "We have a good small-cap network and can source deals that not everybody sees, which is a speciality of this market and our approach."

Finatem IV made seven platform investments, according to Unquote Data. The GP had traditionally focused on DACH-based small- and mid-cap businesses with enterprise values of €20-50m and revenues of €25-125m.

Although the pandemic has affected each sector in different ways, Finatem does not intend to deviate from its established strategy to target companies that have seen significant growth due to the crisis. "At the moment there are many businesses in the market that have seen extraordinary revenues due to the pandemic; you see many examples of this on the stock exchange, with companies whose revenues went up strongly, but we are seeing that the 'winners' of the pandemic are expected to win to a lesser extent in future," said Kartje. "We also see this in our dealflow – many companies had a peak year in 2020 and you are asked to value that fully with high valuations as an investor, but this is not a focus for us. This has definitely been a change in comparison with other years."

People
Finatem – Daniel Kartje (partner).

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