GRO Capital holds EUR 600m final close for Fund III

GRO Fund III was registered in October 2021, according to Unquote Data. Lars Dybkjær, founder and managing partner at GRO Capital, told Unquote that the fundraise began at the start of autumn 2021 and that the fund exceeded its EUR 500m target.

Asante Capital acted as placement agent for the fundraise, while Plesner provided legal advice.

The fundraise brings GRO to more than EUR 1bn in AUM, according to a statement.

GRO Fund II held a final close in October 2019 on EUR 255m and made seven investments in total. The firm’s debut fund held a final close in December 2014 on DKK 1bn (EUR 107m) and made six investments.

The increased size of GRO III will see the GP continue to focus on the same types and sizes of companies, Dybkjær said, but it will allow GRO to take a lead role in its deals more regularly. “We have historically invited a lot of other investors to join us in our deals as we did not have sufficient capital to do the deals by ourselves,” he said. “We want to stay in the segment we are at right now, investing in the same kind of companies we have always invested in, but now we can take higher stakes and be more active in making add-ons – it gives us more freedom to operate.”

Investors
The fund is backed by both new and existing LPs, according to a statement. Dybkjær told Unquote that almost all LPs from GRO II reupped and that the LP base of GRO III includes pension funds, institutional investors, funds of funds and family offices. The LP base is mainly European, with some US investors, he added.

LPs in GRO Fund II include fund-of-funds manager Argentum, as well as Danica Pension and the European Investment Fund (EIF), according to Unquote Data.

Investments
GRO III will follow the strategy of its predecessor, making majority or minority investments in mature B2B software companies in the Nordic, Benelux and DACH regions. GRO backs businesses with enterprise values of EUR 20m - EUR 200m. According to its website, the GP’s minority investments generally consist of a purchase of shares from existing shareholders combined with a capital increase.

GRO II typically deployed equity tickets of EUR 15m - EUR 35m, whereas GRO III’s increased size means that it can deploy tickets of EUR 15m - EUR 70m, Dybkjær said.

“We have historically mainly done primary buyouts – in many cases we are the first institutional investor, and this is what we are looking for,” Dybkjær said, adding that cooperation with management teams plays a key role in GRO’s strategy. “Founders can often take a company to a certain level but need a sparring partner for the next stage. We like when management teams stay on board, because this is when we can bring in our differentiated strategy and operational insights, bringing value to the development of the business early on.”

Asked about the firm’s deal pipeline, Dybkjær said: “Due to the current crisis, there will be people who think of whether now is the right time to sell. But we have a good deal pipeline and a deep operational understanding of the companies in our space, and we can also bring in a lot of data.”

GRO has made three exits to date, including Denmark-based IT service Trifork, which listed on the Nasdaq Copenhagen in May 2021 at a EUR 397 market capitalisation, around six years after GRO first backed the company via its debut fund.

People
GRO Capital – Lars Dybkjær (founder, managing partner).

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