Harbert Management Corporation has reached a first close on its European high growth capital fund after raising €140 million from institutional investors.
The firm invests in venture-backed companies with high growth potential, underwriting tickets between €2 million and €15 million. Loans are short duration – between three and four years – and have coupons between 11 and 13 percent. Transactions include warrants with a life between seven and 10 years.
It is the second incarnation of the strategy and targets a gross IRR between 17 and 22 percent.
Harbert European Growth Capital Fund II has a hard-cap of €250 million. The previous fund generated a net IRR of 8.8 percent, although the firm said this does not include the potential value of the warrant positions held by the fund.
“The European technology SME pool is enormous. We estimate there are more than 9,500 privately-held venture-backed European companies in our target industries,” the firm said in a note to investors seen by PDI.
“The sector is structurally underserved by banks. European banks remain risk-averse given the loss-making nature of high-growth venture-backed companies and struggle to lend cross-border,” the letter said.
Harbert’s European investment team is headed up by Johan Kampe and David Bateman. Both joined the firm in 2013.
A representative for Harbert was not available for comment before publication.
Earlier this month, Harbert’s US strategy, Harbert Growth Partners IV (HGP IV), reached its final close after raising $120 million. It targets investments in healthcare and technology companies.
“We are pleased and grateful for the strong support from both previous fund investors and new investors to HGP IV. With six investments already completed and a robust pipeline, the fund is off to a great start,” said Wayne Hunter, managing partner at Harbert.