IK Partners ventures into UK mid-cap deal-making

Min Ho
02 December 2021

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Pan-European sponsor IK Partners is setting up a mid-cap deals team dedicated to the UK, as it expands its franchise in the country after launching a UK small-cap strategy last year.

The new area, to be announced in the coming months, will be staffed by three or four investment specialists based in London who will contribute towards IK's existing and future mid-cap funds, CEO Christopher Masek said.

The private equity firm is now investing its IK IX fund, which raised EUR 2.85bn in 2020. In April this year, IK also held a final close for its smaller IK Small Cap III fund on its EUR 1.2bn hard-cap.

"Our rationale for setting up a team in the UK mid-market is simply due to the fact that it is one of the largest PE markets in Europe," Masek said. "This alone will allow us to be very selective on which deals we choose to go for."

Last year, the firm, which is headquartered in London but with a historic focus on the Nordic countries, expanded its UK operations to include a local small-cap deals team headed by partner Tom Salmon, as reported.

In what is already a competitive market with players jostling for deals in the European mid-market, IK is keen to emphasise that it can offer UK companies the opportunity to grow across the continent thanks to its presence and network in Benelux, DACH, France and the Nordic region, Masek said.

A further internationalisation strategy could also be on the horizon as IK looks to potential expansion in southern Europe, Masek added. Related to this will be the upcoming opening of a New York office dedicated to fundraising, he said.

While the size of its funds has become larger – its ninth fund being more than 50% larger than the EUR 1.85bn raised for IK VIII in 2016 – IK will remain firmly in the mid-cap territory, Masek stressed.

"For us, we don't see the point of leaving the traditional mid-market space in future fundraisings," he said. "The topic is not about doubling the size of our funds for the merit of doing so, but finding a market and position where we find attractive opportunities and can contribute a differentiated offering."

Instead, the sponsor is keen to emphasise that its larger fund size brings in the skillset and infrastructure that is generally available for large-cap funds, such as its dedicated operations teams, capital markets and an international platform.

Update (02/12/21): This article has been amended to note that IK Partners launched its UK small-cap strategy last year and not earlier this year, as stated previously.