FSN Capital closes fifth fund on €1bn hard-cap

The fund surpassed its €870m target and the final tally for its predecessor, FSN Capital IV, which closed on €624m in 2013.

Morten Welo, FSN's COO and head of investor relations, told unquote" the firm published a private placement memorandum for the fund in February 2016 and had hit 90% of its target by the early summer. In July 2016, a first close of around €643m was registered by unquote" data.

Welo said the fund's management fee and other terms were in line with the current market standard and will have a similar return target to the previous vehicle.

Campbell Lutyens acted as a placement agent for the GP, and Simpson Thacher & Bartlett provided legal advice, as they did for FSN Capital IV's fundraising.

Investors
FSN said it had broadened its international investor base with its latest fund, having received commitments from new LPs in Asia, the Middle East and the US. The total number of LPs increased to around 50, which Welo said is significantly more than the previous fund.

One fund-of-funds that had previously invested with FSN did not re-up, as did a Finnish LP due to a change in its investment strategy.

North American investors provided 29% of the total commitments to FSN Capital V, 13% of the capital came from Asian and Middle Eastern LPs, and 34% was supplied by non-Nordic European backers. Nordic LPs made up the fund's balance of commitments.

The LP base includes the University of Michigan Endowment, which had committed $35m to the fund at first closing, Danish LP Dansk Vækstkapital, Swedish pension fund AP6, Norwegian fund-of-funds Argentum, and Pennsylvania State Employees' Retirement System.

FSN's commitment will be up to 4%, according to Welo, higher than the firm's GP commitment to its previous fund.

Investments
FSN Capital V will follow the same strategy as the funds that came before it, targeting mid-market transactions in Scandinavia and Finland.

The fund will invest in businesses with enterprise values in the SEK 500m-3bn range, across a broad sector profile, seeking controlling stakes through buyouts. FSN Capital V will be able to commit equity tickets of between €30-130m, with a sweet spot of €50-60m, according to Welo. He said the GP does not push up debt levels in its deals, expecting an average of 50% debt in the deals, as was the case with the predecessor vehicle, which also completed deals without a debt component.

FSN Capital V has made one transaction so far, with the buyout of Nordic online retailer of DIY materials Byghemma, which was jointly acquired by fund V and fund IV in October.

Up to 20% of the fund will be available to invest outside the Nordic region.

People
FSN Capital – Frode Strand Nielsen (managing partner); Thomas Broe-Andersen, Peter Möller (partners); Morten Welo (COO, head of investor relations).

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