GP Profile: Silverfleet eyes fundraising progress, new acquisitions

Like most other private equity firms, Silverfleet Capital began a period of intensive portfolio management in the wake of the coronavirus crisis. But Andrew Harrison, head of investor relations for the GP, notes that Silverfleet was able to anticipate the situation early on; as a pan-European GP with international operations, several of the firm's portfolio companies have manufacturing facilities in China. "We could see early on what was happening there and were able to use that experience when we sat down as a group to look at how the portfolio was going to be affected and what mitigating actions we could employ," he says.

The GP is now focused on fundraising and making new acquisitions. "Now we're switching out of survival mode," says Harrison.

Unquote understands the firm is currently raising for Silverfleet Capital Partners III, which was registered in July 2019. Harrison is positive about the current fundraising market, but does have some reservations about the impact of the coronavirus crisis: "Exposure to post-crisis funds is attractive. What LPs will struggle with next is onsite due diligence. I am not sure Zoom can replace physical interactions. Some institutions aren't able to make allocations without that physical meeting."

The firm has been in regular contact with its investors throughout the crisis. "LPs took stock of what they had in their portfolios and wanted to know how our portfolio was doing, and whether there would be extra capital calls or distributions," says Harrison. "I think our LPs have appreciated our total focus on portfolio management and transparent communication." Existing Silverfleet LPs include insurance companies, private banks, pension funds, sovereign wealth funds and asset managers, including BlackRock and the Kuwait Investment Authority, according to Unquote Data.

Silverfleet Capital Investments (2018-2020)

Assets	Date	Sub-sector	Country
Collectia	Feb 2020	Business support services	Denmark
Boa CoreDux	Sep 2019	Industrial machinery	Netherlands
Microgen Financial Systems	May 2019	Software	UK
Care Fertility	Apr 2019	Healthcare providers	UK
Staxs	Jan 2019	Business support services	Netherlands
Prefere Resins	May 2018	Speciality chemicals	Germany

Source: Unquote Data

DACH push
The GP's funds focus on northern Europe. It has offices in London, Munich, Paris, Amsterdam and Stockholm, and has recently begun increasing its presence in the DACH region. In its Munich-based team, the firm hired TowerBrook Capital Partner's Christian Süß as a partner in July 2020 and former Alpina Partners investment manager Stephan Prym in September.

Since 2004, 29% of its portfolio companies have been headquartered in the DACH region and the firm also benefits from the support of several DACH-based LPs. Silverfleet II's investors include German pension fund Arzteversorgung Westfalen-Lippe with a commitment of €35m, Germany-based Asset manager Feri Trust with a commitment of €30m, and Swiss pension fund Pensionskasse Stadt Zurich with a commitment of €21m, according to Unquote Data.

While the firm has been increasing its geographic presence in some areas, the firm has no plans to expand the scope of its investment strategy. Silverfleet III will continue to focus on buy-and-build opportunities in four target sectors: consumer, healthcare, manufacturing, and services. Harrison says: "We've stuck to what we've been doing for over thirty years. The size of our funds mean we will not have to expand our networks further or leave our niche."

Silverfleet II closed on €870m in June 2015 and is now 80% deployed with 11 portfolio companies. Its most recent investments include IVF clinic chain Care Fertility and industrial machinery company Boa CoreDux.

The firm is also currently deploying its European Development Fund, which closed in 2019 on an unspecified amount. It invests in lower-mid-market businesses in northern and western Europe with enterprise values of €25-75m and plans to invest 50% of the capital in EU countries. To date, it has invested in two platforms: software company Microgen Financial Systems and support services company Staxs.

In line with its aggressive buy-and-build strategy, the firm is currently reviewing several investment opportunities. "A number of our platform businesses were seeing a lot of activity on the add-on side," Harrison says. "Smaller businesses than ours have been affected by Covid-19 and do not necessarily have the infrastructure to survive. We are getting approaches from great companies and we have a number of conversations ongoing. It is an effective way to turbocharge value creation."

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