Pinova expects final close for Fund 3 before year-end

The DACH industrial technology and IT investor recently held a second close for the fund, he said, although he declined to comment further.

The fundraising effort would be a "moderate" increase from the EUR 180m it raised for Pinova Capital Fund 2, which closed in early 2017, he said.

Fund 3 will follow the investment strategy of its predecessor, with a focus on industrial technology that will include automation, electronics, photonics and new materials. An equal focus will be placed on information technology, including software, he said.

Pinova typically targets profitable medium-sized technology companies in German-speaking regions with revenues of EUR 10m-EUR 75m, It focuses on companies that have strong growth potential, sustainable competitive advantages and strong positions within their niche markets, according to the GP's website.

Fund 3 expects to make around 10 investments in total, Seggewiß said. The vehicle made its first investment in January via the acquisition of Sematell, an AI-based response management software for text-based customer service in the DACH region, Seggewiß said. A second investment is expected to be closed towards the end of this month, he added.

Meanwhile, exits are continuing, with one more divestment expected towards the end of the year for Pinova's second fund. Four exits have already been made from the vehicle.

Its focus on fast growing, high margin businesses means that the average EBITDA margin for its Fund 2 portfolio companies stands at about 20% on average, Seggewiß said.

In spite of increasing volatility in the public markets for technology businesses, the private market remains active, Seggewiß said, noting the significant level of interest for some of its ongoing exit processes and the wider M&A technology market.

Additionally, Pinova's investment focus on primary deals means that it is mostly involved in proprietary deals or limited auctions, avoiding some of the pricing challenges involved in wide auctions typical of secondary buyout processes, Seggewiß said.

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