Erhvervsinvest gears up for Fund V final close in 9-12 months

Karin Jensen
11 July 2022

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Danish small-to-mid cap investor Erhvervsinvest is aiming for a final close of its fifth private equity fund in the next nine to 12 months, Managing Partner Thomas Marstrand said.

Erhvervsinvest V Fund, which recently held a first close on just over DKK 1bn (EUR 130m) following its launch late last year, has a hard cap target of DKK 2bn, he said.

The firm is targeting a mix of institutional investors and family offices, with no anchor investor lined up for the vehicle. LPs include AP Pension, Nykredit, Spar Nord and Velliv Pension & Life Insurance.

Fund V's investment period will be around five years, when it expects to be deployed in 10-15 companies, Marstrand said.

The fund's predecessor, Erhvervsinvest IV, was launched in February 2017 and raised just under DKK 1.5bn, according to Unquote Data. Investors included Argentum Fondsinvesteringer, Danica Pension, HAEK Securatisation, LGT Capital Partners and Nykredit.

Investment plans
Fund V has "a small handful" of targets in its pipeline and is expected to make its first investments during the second half of this year, Marstrand said. Like its predecessors, the new vehicle will target smaller and medium-sized, well-established and well-managed companies, typically in Denmark, across all sectors.

Ideal targets will likely have revenue of DKK 75m-750m, he said. Existing portfolio companies have revenue ranging between DKK 100m and DKK 4bn, he said, stressing however that the focus is more on growth potential rather than revenue when making an investment.

Erhvervsinvest always acquires a majority stake in a company, usually above 80% and below 100%, with management, founders or owners retaining a small minority stake, Marstrand said.

Portfolio companies
In June, Erhvervsinvest acquired Tjellesen Max Jenne, a Danish pharmaceutical wholesaler, with revenue of DKK 3.8bn for the financial year 2020/2021, as reported. This acquisition was the last investment from Erhvervsinvest IV. The deal is still pending authority approval, Marstrand added.

Other acquisitions by Fund IV include GASA Group, Robco Engineering, Arminox and Delika Food Group.

The vehicle has seen two exits: Container Centralen, which was acquired in February 2019 and sold in January 2021 to VGB, the Dutch trade association for wholesale of flowers and plants. CC European Retail, which was acquired in January 2021, was sold in May 2022 to Netherlands-based HB RTS.

In Fund II, established in 2007, one portfolio company, Design Eyewear Group International, is still to see an exit, but last September, Mergermarket reported that Danske Bank was mandated to run the sales process.

In Fund III, established in 2013, six companies remain in the portfolio, including Gaming, Agrometer, Randers Reb and European Freeze Dry.