Polaris launches flexible capital strategy with DKK 1bn fund

Eliza Punshi
19 May 2021

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Nordic GP Polaris has launched Polaris Flexible Capital to invest in junior debt and minority equity.

The GP started raising a DKK 1bn (€134m) fund for the new strategy in April. Jesper Langmack, who has been appointed head of Polaris Flexible Capital, told Unquote: "While we've only had our pre-marketing rounds so far, we've had success in getting substantial commitments already before going to the market officially." It is aiming for a first close after the summer break and a final close by the end of the year.

The fund will typically invest DKK 50-250m (€7-27m) in around 10 companies, and will provide Nordic medium-sized companies with flexible capital for growth, investments, ownership changes and optimisation of capital structure.

Langmack, who joined Polaris from Danica Pension, said the need for flexible capital was stronger than ever, given the underserved market for junior capital: "Banks have a hard time giving loans to mid-cap companies. Similarly, pension providers, due to regulation, must commit big ticket sizes every time, so they also have a hard time doing smaller, mid-cap investments. Private equity funds, even with a lot of dry powder there, when they need junior capital, where can they go? If they want junior capital of say up to €20m, big debt funds won't provide this because it's too small a ticket for them. So we see a space in the market where we don't see much competition, and we'd like to tap into that space.

"Polaris looks at around 200 deals every year, and a big percentage of them aren't suitable for Polaris's strategy, but they can now put these deals to our table. So for Polaris, they now have a full range of products across the capital structure, with junior debt, minority, as well as majority equity investments."

The GP has also appointed Kent Brovn Arp as partner at Polaris Flexible Capital. He joins from Danica Pension, and previously worked for PensionDanmark as well as corporate finance advisory firms KPMG and EY.

At the same time, Peter Høltermand has been appointed chair of the investment advisory board. Høltermand joins from SEB where he has headed the Danish branch since 2003 and has been part of the Scandinavian executive management since 2011.

The investment and the advisory board team of Polaris Flexible Capital will be expanded to add additional members within the next year.