GI Ventures, the Munich-based seed and start-up investor, is expanding into the German-speaking buyout market. A E100m fundraising effort is already underway.
Preparing the move into the buyout market, the firm has strengthened its investment team with the appointment of Peter Schiefer, a former managing director of Goldman Sachs Capital Partners, who joins as partner. In addition, Bettina Strube joins as investment manager, having worked at venture capitalists Kappa IT Partners and Berlin Capital Fund.
To raise the buyout fund, GI has teamed up with HypoVereinsbank, which has made a cornerstone investment in the fund. GI will be looking to invest between E10m and E20m in Mittelstand businesses, aiming to make up to eight investments from the fund.
Commenting on the firm’s prospects, new partner Peter Schiefer said GI was expecting to benefit from a cultural change amongst company owners who were becoming increasingly interested in private equity as a funding instrument. “The Hausbanks are retreating, facing more pressure to price the credit they extend to businesses at a level that actually reflects the risk they take on. As cheap credit dries up, owners realise that an LBO structure may be necessary to take their businesses forward.”
Conscious of Mittelstand owners’ sustained reluctance to sell out completely, GI is prepared to back companies as a minority shareholder, provided it is granted full operational control. According to Schiefer, this part of the proposition is already proving popular with vendors: “The early indication is that deal flow is very strong. A lot of it is proprietary, so we’ll be able to avoid auctions, pick up investment opportunities quickly and turn deals around quickly.”
Schiefer also said availability of debt financing was developing favourably, with a number of potential providers working on suitable leveraged loan and mezzanine products.
GI’s expansion into Germany’s mid-market comes at a time when relatively few houses are competing for business in this segment. Among the recent newcomers to target the mid-market are Orlando Management, which has raised a E125m special situations fund, and Nordwind, a new venture set up by former Carlyle partner Hans Albrecht.
GI was set up in 2000 by a team of four to originally help build new businesses predominantly in the TMT sector. Founding partners are Jürgen Diegruber, Ann-Kristin Achleitner, Peter Nietzer, and Tim Stemmer. The firm will continue to develop its early-stage investment business, looking to utilise the team’s operational know-how as well as financial expertise.