Unigestion holds €611m final close for second Direct fund

Harriet Matthews
01 July 2021

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Unigestion has held a final close on тЌ611m for its Unigestion Direct II fund, surpassing its target of тЌ600m.

Unigestion Direct II is now more than 40% deployed and has backed 12 companies. The fund is expected to be fully deployed by the end of 2022 and could be around 50% deployed by the end of 2021, Paul Newsome, co-head of investments at Unigestion, told Unquote.

The fund was launched in March 2019, as reported. It held a first close in August 2019 on €300m, followed by a third close in June 2020 on €375m, as reported. The fund held another close in October 2020 on €500m.

Although part of the fundraise took place before the coronavirus pandemic, Newsome told Unquote that the pandemic did influence the way in which the GP engaged with its existing and prospective LPs: "We had to adapt to a new way of doing things. We already had well-established relationships with existing investors, as well as with some potential new investors. We did a lot of calls and due diligence with them via Zoom and Teams and so on. That proved very effective in the end, as it meant they could meet more of the team than usual, rather than doing a site visit to one office. We also had several webinars where we were able to present updates on the portfolio and have interviews with portfolio companies. We became more creative with the digital options that were out there."

Newsome expects that this process will continue to influence how the GP interacts with its LPs: "It has become a template for how we want to reach out to our investors and prospective investors; it will be a combination of physical meetings, Zoom meetings to meet more of the team, and webinars for portfolio updates. For example, our European investors could meet our people in New York or Singapore. These meetings were ad hoc in the past, but we can now do them much more routinely."

Arendt & Medernach provided legal advice for the fundraise.

Unigestion's previous Direct vehicle held a final close in July 2017 on €255m.

Alongside the fund close, Unigestion has announced several promotions and new hires. Pieter-Jan Frederix and Ralph Buchel have been promoted to private equity partner, while Philipp Scheier has been appointed as a principal in the firm's Zurich office from his previous role at Halder.

The GP is continuing the fundraising process for its Secondary V vehicle, which was launched in January 2020.

Investors
The fund has around 40 LPs, Newsome told Unquote. These include public and private pension funds, insurance companies and family offices. Around 75% of the fund's commitments are from existing investors.

"The makeup of the LP base is broader than it was in our prior fund in terms of geographies," Newsome said. "We have some new Middle Eastern and US investors, as well as our large traditional European base."

Investments
The fund targets small and mid-cap companies in Europe, the US and the Asia-Pacific region, focusing on long-term growth themes including nutrition, technology-enabled services and healthcare.

"We are seeing attractive dealflow; we are almost spoiled for choice and it allows us to be super selective," Newsome told Unquote. "In certain pockets of the market, valuations can be high, and they have increased; but due to the depth of our dealflow, we can be disciplined, and we can say no if deals become too expensive. We're very happy with the progress of the fund to date."

The fund will make co-investments alongside GPs with whom Unigestion has existing relationships, partnering with small-cap and mid-market managers and investment partners in Europe, the US and Asia. In addition, the fund will make syndicated deals alongside GPs who raise capital on a deal-by-deal basis. The third component of the strategy will be direct "lead deals" where Unigestion takes a majority position. "Lead deals" will make up around 25% of the fund's activity, with co-investments with Unigestion's existing GPs comprising 50%. Investments with fundless GPs will make up the remainig 25%.

For co-investments alongside smaller funds, the fund will deploy tickets of €15-20m on average. For co-lead and lead deals, the ticket size can go up to €50m or higher if the GP brings in its fund investors for co-investments. The vehicle expects to make 25-30 deals, as previously reported.

Newsome told Unquote that, although the GP generally focuses on companies where growth is driven by its key investment themes, the fund has seen particularly good dealflow in its healthcare theme: "The 'healthcare reengineered' theme has been an important one for us. A number of our deals so far have been in companies that have emerged from the pandemic in good shape, with a strong tailwind behind them in various healthcare sub-sectors."

"We believe that the climate transition theme will also continue to be important," Newsome added. "Within that there are sub-sectors including energy transition, renewable energy, food technology and clean transportation."

People
Unigestion – Christophe de Dardel (head of private equity); Paul Newsome (co-head of investments).