Maguar Capital holds €104m close for debut fund

Founding partners Arno Poschik and Mathias Ick told Unquote that Maguar I was launched in Q1 2020, with initial discussions taking place around the time of SuperReturn; the process was paused due to the pandemic from around March-May 2020, during which Maguar worked on its first deal: the acquisition of HR software platform HRWorks.

Munich-headquartered Maguar was founded in 2019 by Arno Poschik, Gunther Thies and Matthias Ick. Thies and Ick have prior experience as software entrepreneurs, while Poschik has held prior roles at firms include Hg and EQT. Maguar has a team of six, including investment professionals and a fund controller.

The fund was significantly oversubscribed, the GP said in a statement.

Clifford Chance provided legal advice on the fund, while RDT Dr Dautel acted as tax adviser.

Investors
LPs in the fund include Aberdeen Standard Investments, Adams Street, Commonfund, Bregal, Golding Capital and the European Investment Fund, the GP said in a statement. The fund is backed by investors from both Europe and the US, as well as family offices. US LPs provided 15% of the capital for the fund and 70% of the vehicle's aggregate capital is from institutional investors.

"Our goal was to build an LP base that we could grow with; we now have six institutional investors that we are able to name, and these are all investors that we hope to grow with," Ick told Unquote. "They also clearly stated that this was their intention."

"One of our take-aways from our fundraising process is that DACH small-cap software is a niche that LPs really like," Poschik added, noting that the firm sees co-investment opportunities as an option for future deals. "We saw this in HRWorks. This gives us additional flexibility, since LPs are highly interested in co-investments and have approached us proactively. They have an appetite for technology and software, and it gives us more flexibility in deal-doing."

Investments
The fund will focus solely on small-cap B2B software deals, targeting profitable founder-led businesses with EBITDA of €1-6m. The vehicle plans to make five to eight deals during its investment period, with equity tickets of around €10-20m.

Asked about the GP's deal pipeline, Poschik told Unquote: "We focus on a specific niche in the market and the pipeline is good. We are pursuing one deal exclusively, with another just starting out – so we have two live deals and we expect to do one or two more deals this year."

The vehicle has made two investments so far. Maguar acquired a stake in HRWorks in August 2020, as reported. Maguar I LPs Golding Capital Partners and Aberdeen Standard Investments co-invested alongside the GP, with EMZ providing subordinated debt and co-investment capital.

The GP also invested in legal software platform STP alongside Bregal in November 2020, as reported; Maguar founding partner Gunther Thies founded STP in 1993 and was CEO of the company until 2017.

The GP is well-positioned to make primary deals in the small-cap software space, Poschik told Unquote: "A primary is exactly where our strength lies and where we can differentiate the best, since we can bring the discussion to a different level with the founder or the CEO, speaking founder to founder or entrepreneur to entrepreneur."

However, the GP will not only focus on primary deals, Ick noted: "Sellers select a partner when selling a company and we have a strong positioning here, since we have been entrepreneurs and executives ourselves. But we would do a secondary deal if we like the company and the value levers involved – primary buyouts are not a hard criterion for us."

People
Maguar Capital – Arno Poschik, Gunther Thies, Matthias Ick (founding partners).

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