Certior Capital holds first close for second PE emerging managers fund

The GP is not disclosing the amount raised at the first close of Certior Private Equity Fund II (CPEF II), Hara said, but he noted that this close will put the fund in a position to act on its pipeline and make its first investment.

Initial discussions with LPs for the fundraise began in autumn 2022, Hara said. The fund is expected to remain open throughout 2023.

Borenius is providing legal advice on the fundraise, according to a press release from the GP.

Certior Private Equity Fund I (CPEF I) held a final close in 2020, raising around EUR 25m-EUR 30m, Hara told Unquote. “The rationale behind increasing the target size of the fund this time is to do slightly larger tickets,” he said. “The first fund was a bit of a concept fund, where we built a portfolio of four to five representative GP manager relationships on which we will build this fund, following the same approach with around six to eight GPs, investing in funds and co-investments.”

Although now is a tough time to fundraise as an emerging manager, Hara believes that there are strong arguments for backing these GPs, particularly given the fact that this is a part of the market that many LPs often miss.

“The underlying return profile with large-cap managers has much higher beta than what we are seeking here," he said. "These are idiosyncratic transactions with entrepreneurs, rather than buying from them, and valuations are typically much lower. Working with emerging managers means you need to keep downside protection in mind, and we offer a solution for investors seeking this risk-return profile and diversification.”

CPEF I is showing returns of 20% net IRR as of Q2 2022, according to the press release.

In addition to its Private Equity funds, Certior manages a Credit Opportunities strategy that focuses on sponsorless deals for European SMEs, as well as a Special Opportunities strategy that targets small-cap and mid-market opportunities in areas including distressed debt and non-performing loans.

Certior’s latest credit fund is expecting to hold a final close in April this year, Hara said. Certior's debut Special Opportunities Fund held a final close in November 2021 on around EUR 36m-EUR 37m, he said.

Investors
The fund is currently backed by a range of Finnish institutional investors, including pension funds, endowments and financial institutions. The vehicle expects to attract Nordic and European LPs for its subsequent final close, Hara said.

Investments
The fund will seek exposure to 30-50 underlying businesses through relationships with six to eight emerging managers, focusing on capex-light companies with recurring revenues and mission critical services backed by strong secular growth. It will make primary fund investments and co-investments, splitting its capital evenly between the two.

“Having asset-level selection is important to us, so we prefer fund positions that have visibility into the transactions and are not over-diversified,” Hara said. “We are also working with fundless sponsors who are raising deal-by-deal, where we can be selective on the assets that our capital goes into.”

The firm typically makes 10-15 co-investments per year, with these deals outperforming the underlying portfolio, Hara said.

The GP has sourced around 100 potential deal opportunities with around 10 funds, SPVs and co-investments over the past 12 months, according to the press release.

Certior Capital has previously backed early-vintage funds from managers including Beechbrook Capital, Northedge and Volpi Capital, according to Unquote Data.

People
Certior Capital – Timo Hara (founder, partner); Ari Jauho (chairman).

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Funds
• Fund-of-funds
• Nordics
• Finland
• Co-investments