Verdane closes debut impact growth fund on EUR 300m

The vehicle surpassed its EUR 225m target.

In addition to the capital raised, the fund has taken on an ESG-linked credit facility provided by Nordea. The fund's carried interest is also linked to the achievement of sustainability KPIs.

The fund's name, Idun, comes from that of the Norse goddess of spring and youth.

Frida Einarson, head of investor relations at Verdane, told Unquote that the fund had been in the works for around a year. "We started thinking really seriously about launching the fund a year ago, doing our homework in terms of the deals, the competitive landscapes, what our methodology could look like, what our investors might think." The fundraise itself took around six months, she said: "The process kicked off in May and we were fully allocated by November."

The fund is expected to allow Verdane to address a greater portion of the market opportunities that it already sees. "We are seeing so much activity around the smaller end of our current mandates, but it does not make sense for us to do this with tickets starting at EUR 10m-15m in a EUR 600m fund, so we wanted to set up something based around that," Einarson told Unquote.

The fund is not only an extension of Verdane's existing strategy, but also responds to existing LP demands, Einarson said. "Many investors want to deploy in a more sustainable manner, but being a credible manager isn't enough, you need to have a track record to support this. We have done 28 impactful investments in our current funds already, so Idun is a natural extension of what we are already investing in."

In addition, the work behind the fund will assist Verdane with its other internal processes, Einarson added. "Strategically, having this fund is also very important for us in putting together best practice frameworks for evaluations and reporting, and we can use this across the Verdane platform."

The fund will define impact as "addressing at least one of the Sustainable Development Goals (SDG) and qualifying inside Verdane's proprietary impact framework, built on the Impact Management Project", according to a statement.

The fund is headed by existing Verdane partners Christian Jebsen and Erik Osmundsen. Directors Reed Snyder and Karin Kans, as well as sustainability lead Axel Elmqvist, will also form part of the team. Verdane has a team of 90 in total across its investment strategies.

Rede Partners and Andulf Advokat provided advice on the fundraise.

Verdane targets returns of 3x money and 25% IRR across all of its strategies. Its Verdane Capital strategy invests in northern European technology companies, taking majority and minority stakes either by investing in them directly or through portfolio acquisitions. Verdane Capital X held a final close in January 2019 on its SEK 6bn (EUR 592m) hard-cap.

Verdane's Edda strategy generally invests EUR 10m-150m per deal, targeting software and consumer internet businesses in north-western Europe. Verdane Edda II held a final close in January 2021 on EUR 540m, surpassing its EUR 450m target.

The GP's recent activity includes the sale of its stake in retail digital operations platform Brightpearl, which saw the GP generate returns of 4x in a deal that valued the company at USD 360m, as reported.

Investors
Both new and existing investors have joined the fund's LP base, Einarson told Unquote. "Among our existing investors, most of them had not committed to an impact fund before – for many of them it is their first impact commitment, whereas the new ones all have impact allocations already."

LPs in the fund include Nysnø, Norway's state climate investment fund, as well as Swedish pension fund AP3, according to a statement. Adams Street Partners and clients of asset management firm Mercer have also backed the fund.

"The LP base is not dramatically different from our other funds, but 30% of the capital is from outside the Nordic region, showing that there is clearly interest in northern Europe coming from outside the region," Einarson told Unquote. "Of the capital, 70% is from investors who are returns-driven, such as a foundation with a charitable purpose, and they will use these returns for projects including education."

The fund is also backed by a number of family offices.

Investments
The fund will deploy initial equity tickets in a EUR 10m-15m sweet spot, with further follow-on investment available for each company for projects such as M&A.

The fund backs companies involved in the themes of energy transition; sustainable consumption; and resilient communities, continuing its focus on technology-backed businesses. "You can scale impact pretty significantly with tech companies, even with a small investment," Einarson told Unquote. "When we invest, we want to see that the impact will scale inherently with the business model. We have a long experience of helping these types of companies scale, so it seems natural for us to do this."

Verdane Idun is expected to make 20-25 deals in total and has made three deals to date. The fund has invested in workplace wellbeing software Auntie, sports and physical health startup Spond, and one further undisclosed business.

People
Verdane – Frida Einarson (head of investor relations); Bjarne Kveim Lie (co-founder, managing partner); Christian Jebsen, Erik Osmundsen (partners).

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