COI Partners launches DACH growth fund with EUR 120m target

COIP DACH Growth II is COI Partners' first institutional fund, although it previously raised a fund of less than EUR 100m with Oddo BHF (then known as BHF), David Salim, partner responsible for strategy at COI Partners, told Unquote.

COIP II held a first close in June 2022 on less than EUR 100m, Salim said. "Our previous fund was fully run down and distributed by 2020, so we were increasingly getting demand for a new fund with a similar approach," he said. "At the same time, we are also seeing large opportunity in the growth sector in Europe – it's not as well known a market here as it is in the US, but we have been doing this for 20 years with an entrepreneurial angle and we see very few local players in this market. Our local background and network is very important to entrepreneurs seeking financial backers."

The fundraise will bring the GP's AUM to EUR 300m, according to a statement.

In addition to securing fresh capital, the fundraise comes with a name change for the firm and a confirmation of the development of its investment strategy. "We have evolved and professionalised in the past few years, and for the last 10-15 years we have generally been acting as the lead or co-lead investors in the deals we do," Salim said. "We have a lot of experience, including in investing in downturns, and as we are backed by entrepreneurs, we need to be disciplined and very thorough in how we approach transactions and valuations."

COI Partners has offices in Berlin, Frankfurt and Zurich. The GP is currently building up its team and expects to make further hires before the end of this year, Salim said.

Investors
The fund's LP base currently includes the COI Partners team, entrepreneurs, family offices, and Swiss bank Riechmut Privatbankiers as anchor investor, Salim said.

"We have a broader geographical scope fundraising than our investment scope," Salim said. "We expect the bulk of our investors to be from the DACH region in the next few closings, but the fund will be open for the next 12-18 months before the final close, and for that, we expect to have entrepreneurs, family offices, and small and mid-sized institutional investors."

Investments
The fund will generally invest in DACH-based companies with revenues of EUR 5m-EUR 10m upwards, focusing on businesses with proven business models. Targets will be EBITDA-positive or will have a clear path to profitability, Salim said.

The GP invests EUR 15m-EUR 30m for each deal, which will be split 50:50 between COIP II and the GP's deal-by-deal vehicles. The fund has not yet made any deals but expects to make eight to 12 in total, Salim said.

"We are not in a hurry to invest – we have to find a appropriate opportunity at the appropriate price," Salim said. "Given our typical investment pace, I would expect to make one to two deals in H2 2022, and the next deal we make will also be financed from the fund."

COI Partners generally invests for stakes of 25% to two-thirds and broadly classifies its growth deals into two types: the next stage post-venture; or investing in SMEs. "The priority for us is primary investments where we are injecting money into the company, often with entrepreneurs selling a small stake," Salim said. "But we have also bought out existing shareholders who are no longer involved in the daily business. It's usually a mix of the two."

The fund is sector-agnostic but the GP has typically invested in IT and software, consumer and retail, life sciences, technology, and industrials.

"Several elements will play a role in refining our pipeline," Salim said. "We will look at the quality of the founders of the company as we invest alongside entrepreneurs with skin in the game. Secondly, we need to understand the business model fully and appreciate its potential going forward and whether it has potential to scale with growth equity capital."

The GP is aware of the need to assess how the current macroeconomic situation could impact potential portfolio companies. "We also need to understand macro aspects such as the impact of the energy situation in Germany and the DACH region on the company, and the impact of interest rates," Salim said. "We don't use leverage, so we try to create value through economic improvements."

Its previous investments include Germany-headquartered online glasses and contact lenses marketplace Mister Spex. The GP invested in bike rental business NextBike in 2015, selling its stake in the company in a trade sale to VC-backed e-mobility startup Tier Mobility in November 2021. The GP also previously owned a stake in Germay-based quick service seafood restaurant chain Nordsee.

COI Partners' current investments include Berlin-headquartered consumer electronics rental platform Grover; online sports goods retailer Keller Sports; and ResearchGate, an online networking platform for scientists.

People
COI Partners – David Salim (partner responsible for strategy); Farsin Yadegardjam (partner).

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

• Topics
• Funds
• Buyout
• Venture
• DACH
• Technology
• Consumer
• Healthcare
• Industrials
• Germany
• Exclusive