Novalpina to lose control of EUR 1bn debut fund

Novalpina was founded in 2017 by former TPG Capital executives Stephen Peel and Stefan Kowski, alongside Bastian Lueken, who previously led Platinum Equity's European investment team. The breakdown of the firm follows a dispute among the founding partners about the deployment of the remaining capital in the firm's inaugural fund, Sky News and the Financial Times reported.

LPs are expected to vote in August on how to proceed, which is likely to result in the appointment of a third-party fund manager to manage and gradually wind down the fund's assets. Novalpina and its related structures are also expected to be wound down over the coming months.

Novalpina held a final close for its first fund in March 2019, as reported by Unquote. Novalpina Capital I backs European mid-market companies with a focus on the DACH region, the UK and France. The fund makes equity investments of EUR 75m-200m, targeting businesses with enterprise values of EUR 250m-1bn. The fund generally backs companies with EBITDA of EUR 25m-80m.

The fund aimed to make seven to nine platform investments in total and has made three platform investments to date. The most high-profile of these is Israel- and Luxembourg-headquartered cybersecurity and intelligence software NSO Group (manager of spyware product Pegasus), which Novalpina acquired in February 2019 in a EUR 1bn buyout from Francisco Partners.

Novalpina recently completed a bolt-on for Estonia-based Olympic Entertainment Group in July 2021, acquiring Romania-based gambling machines operator MaxBet. 

The fund also bought a majority stake in Laboratoire XO, a French pharmaceutical company focused on the production and distribution of prescription drugs treating chronic diseases, at the end of last year.

Novalpina Capital I was 47% deployed as of March 2021, according to Unquote Data. In November 2020, Unquote sister publication Mergermarket cited co-founder Stefan Kowski as saying that the GP had made commitments for 60% of the fund and could make three more investments. The fund has also made debt investments, including in Spain-based pizza chain Telepizza, Unquote sister publication Debtwire reported.

LPs in the vehicle include North American and European private and public pension funds, endowments, insurance companies and high-net-worth individuals. These include the Oregon Public Employees Retirement Fund, which made a EUR 200m commitment to the vehicle, according to Unquote Data. The Alaska Permanent Fund Corporation committed USD 59m to the fund. The vehicle had a GP commitment of EUR 75m.

Novalpina Capital I targets returns of 20-30% gross IRR and a 2.5x money multiple.

Novalpina could not be reached for comment at the time of publication.

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