Herkules holds NOK 2.5bn final close

Mikkel Stern-Peltz
25 November 2014

Tweet
Facebook
LinkedIn
Google plus
Send to

Norwayтs Herkules Capital has held a final close on NOK 2.5bn for its Herkules Fund IV, short of its initial NOK 4bn target.

Herkules senior partner Tore Ryssing-Nielsen told unquote" the GP had been forced to prolong its fundraising, as it had become clear after the fund was launched in late-2012 that market conditions would not support the fund's initial target.

The senior partner emphasised that while the fundraising environment was generally tough, Herkules' fund is big enough to continue the firm's strategy.

Ryssing-Nielsen said there is a big shortfall of investors locally in Norway, with big Norwegian institutions such as Ferd and the country's banks withdrawing from the private equity market.

He pointed to the misconception that the Norwegian wealth equates to a lot of money for investing. Despite the sovereign wealth fund, he said there is very little "risk capital" in the Norwegian market and very few institutions participating in the alternative market, with most of the money in private hands going into property.

The GP also mentioned its first fund, the NOK 1.25bn 2004-vintage Herkules Private Equity Fund, had been fully returned this year, before its 10-year anniversary.

Investors
The fund has seen substantial recommitment from LPs in Herkules' previous vehicles, and will see the GP's management and employees put in more than 4% of the capital.

Returning investors in Fund IV include Argentum – which committed €13.4m – 3AP Fonden, Auda, SL Capital, Pantheon, DB Private Equity and AlpInvest.

Investments
Herkules said its newest fund is largely a mirror image of its previous vehicles, focusing on five sectors: energy; consumer goods and retail; healthcare and pharma; services; and specialised industries.

According to Ryssing-Nielsen, the GP plans to increase co-investments with Fund IV, which will be offered to the fund's existing LPs.

The investment strategy is to acquire minimum stakes of 51%, with a 70% ownership or more in the majority of cases. The minimum investment from the fund is NOK 100m, with a maximum commitment per equity ticket of 15% of the fund's size.

According to unquote" data, the GP has historically allocated most of its capital to oil & gas, consumer goods and industrials. The majority of its deals have been in Norway.

Four investments have been made through Fund IV so far: Petroleum Technology Company, Didriksons, Elektroimportøren and PSW Group. The terms in the vehicle follow the market-standard 2% fee, 8% hurdle rate, 10+1+1 lifespan and five-year investment period.

Its previous fund was launched in 2008, and closed on NOK 6bn.

People
Tore Rynning-Nielsen is a senior partner at Herkules.