H2, Sherpa Capital and Auctus create Optimum Alliance

The alliance is comprised of investors in SMEs with a focus on value creation and buy-and-build strategies.

Member firms hope the alliance will accelerate European roll-outs for their portfolio companies and offer deal origination resources and transaction expertise. The trio will cooperate on deal situations and co-invest in appropriate transactions.

Patrick Kalverboer, managing partner at H2 Equity Partners, stresses that the Alliance does not imply that the three GPs are buying stakes in each other, and that sourcing will also be dealt with independently. What the Alliance really brings to the three GPs is the facilitation of co-investments among them and the sharing of ideas on how to optimise investments, while managing portfolio companies.

"We look forward to having conversations with peers regarding our investments and sharing best practices; we think that this extra input will help our portfolio companies to do even better than what we have seen currently," says Kalverboer. "Our ultimate goal is to further develop and strengthen our current strategy with the support of international partners, rather than venturing in new untested strategies."

Specific benefits to portfolio companies include receiving introductions to local contacts such as lawyers when negotiating property leases for international expansion or gaining support from member firms in the local language when bolting on companies in new markets.

Auctus, H2 Equity Partners and Sherpa all target the mid-market space, though they have complementary investment strategies and operate in different geographies in Europe. Kalverboer says: "One of the main advantages of the alliance is that if one of either Auctus, H2, or Sherpa's portfolio companies have several branches spread out through Europe or plans to expand into a new region, it is likely that the teams of one of the other two GPs will be able to assist the company on the ground and share their local network."

The alliance will gradually expand to add new firms that do not compete with existing members and also focus on SMEs. Kalverboer says the three GPs share the goal of increasing the capital commitment towards their own funds.

Munich-based Auctus invests in the DACH region and is currently fundraising for its fifth vehicle with a target of €250m.

H2, which is based in Amsterdam, invests in companies in the UK, Ireland, Benelux and Germany, and is currently investing from its £200m H2 Equity Partners Fund V.

Based in Madrid, Sherpa Capital is a lower-mid-market firm focused on distressed and underperforming companies in Spain and Portugal. The firm closed its Sherpa Capital III fund on €125m in May 2018.

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