SwanCap closes fifth fund at EUR 420m

SwanCap V has surpassed its EUR 400m target. The fund was launched in Q3 2020 and is now close to being 50% deployed, co-CEO Florian Kreitmeier told Unquote. Swan V is currently performing at 1.36x gross TVPI, he said.

Although Swan I, II, III, and V operate a co-mingled strategy of primaries, co-investments, and secondaries, the GP also manages dedicated co-investment funds. SwanCap Private Equity Co-Investment Opportunities Fund IV held its final close in September at EUR 303m, and the fund has made 25-30 investments in Europe and North America, Kreitmeier said.

Following the final close of SwanCap V, SwanCap intends to launch SwanCap VI in June 2022, Kreitmeir said. The fund will follow the co-investment strategy as its predecessor co-investment vehicle.

SwanCap Partners was formed as an independent firm in a spin-out from the private equity unit of HypoVereinsbank/UniCredit in 2013. It has offices in Munich, New York, Milan, and Luxembourg. At the time of its foundation, Swan stood for "sleep well at night", referring to the firm's risk-adjusted returns strategy with a focus on capital preservation, high-quality assets, and value creation, Kreitmeier told Unquote.

The GP has more than EUR 4bn of AUM, around half of which comes from institutional managed accounts of EUR 100m-EUR 600m that are separate from its funds. The firm has made around 200 primaries, over 100 co-investments, and 50 secondaries deals in total.

SwanCap is a PRI signatory and incorporates ESG into its strategy, according to Kreitmeir. "We undertake operational and ESG due diligence before investing. We do consider impact strategies, but they need to meet our risk-adjusted returns hurdle."

Investors
Institutional investors comprise 80% of the fund's LP base, Kreitmeier said, with the remaining 20% comprising single-family offices. In terms of geography, 80% of the fund's LP base is from Europe, with around half of this made up of German LPs, Kreitmeier told Unquote. Existing LPs make up 70% of the fund's LP base, with 30% made up of new investors.

"Around 90% of our LPs used to be institutional investors, but the portion of private HNWIs has grown, so the number of LPs has also risen," Kreitmeier said. "We have around 60 HNWIs via our Luxembourg feeder vehicle, which allows for commitments from EUR 250,000. If we count the feeder vehicle as one LP, there are around 50 LPs in Swan V."

According to Unquote Data, LPs in the firm's previous funds include AlpInvest, Ardian, and Unicredit.

Investments
Primary fund investments will make up 70% of the fund, Kreitmeir said. Swan V invests in the European and North American mid-market, usually in the EUR 300m-3bn range. "We are very selective," Kreitmeier said of the firm's primary deals. "We have our core relationships, but we also look at new funds and maintain contact and dialogue with new names in the market. We do invest in first-time funds when we know the people involved, such as a spin-out."

Co-investments and secondaries will make up 30% of the fund. For co-investments, Swan V will invest around EUR 10m per deal and is sector-agnostic.

SwanCap generally makes 10-15 investments across its strategies per year, transacting selectively on 10-15% of the deals that it sees, emphasising the importance of creating a balanced portfolio. "We do look for sector exposure via certain managers, but it's all about portfolio construction: we need to look at sectors, transaction sizes, strategies such as buy-and-build, and geographies," Kreitmeier said.

According to Unquote Data, SwanCap has previously made commitments to funds managed by GPs including KKR, Afinum, Hg, Deutsche Beteiligungs AG, Nordic Capital, and PAI Partners.

People
SwanCap Partners – Florian Kreitmeier, Andreas Bohn (co-CEOs, managing partners).

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