Herkules is most in-demand small European LBO manager

Germany's Afinum and capiton came second and third, with buyers paying close to par for the most in-demand funds, according to a report by Setter Capital.

Norway’s Herkules Capital has retained its status as the most popular small European buyout manager on the secondaries market, according to a ranking by Setter Capital released on Monday.

German firms Afinum and capiton AG took second and third place respectively, previously from sixth and fifth place, according to Setter’s 20 Most Sought-After Small European LBO Managers on the Secondary Market Q3 2015 report, which ranked managers whose most recent funds are below $500 million.

Palamon Capital Partners’s Palamon European Equity funds dropped out of the ranking.

Funds from the managers that made the list traded at an average of 99 percent of net asset value (NAV), according to the report.

Herkules invests in companies in the Nordic region and acquires majority interests in established businesses with strong growth potential, according to its website. The firm has raised four funds since 2004 and manages NOK15 billion ($1.8 billion; €1.6 billion). In June, Herkules said it had agreed to sell Swedish coffee chain Espresso House, which it had held through its Herkules Private Equity III fund since 2012, to JAB Holding in a deal reportedly worth NOK 2.2 billion.

Afinum specialises in investing in financially-sound and successful mid-market companies in the German-speaking region as well as in neighbouring countries in Europe, according to its website. Berlin-based capiton makes investments in Germany, Austria and Switzerland through management buyouts and expansion financing, preferring high-income companies which generate turnover of €50 million to €500 million, according to its website. In June, capiton sold its investment in accounting firm svt Group to IK Investment Partners for an undisclosed sum.

Funds that made the list have an average size of $302 million and an average net internal rate of return (IRR) of 15.11 percent.

Here are the top 10 most popular European small buyout fund families:

  • Herkules
  • Afinum
  • capiton AG
  • MCH Iberian Capital
  • Norvestor Equity AS
  • Polaris (Denmark)
  • Lyceum Capital
  • Stirling Square Capital
  • Avedon Capital Partners
  • 21 Centrale Partners

In September, IK Investment Partners topped Setter’s list of most sought-after European mid-market LBO managers, a position it had held for 12 months. Graphite Capital and Astorg Partners came second and third.

Setter Capital bases its research on the Setter Liquidity Ratings, which rates fund families as excellent, very good, good and unrated, depending on demand and saleability of the fund families on the secondaries market. Setter’s ratings are largely determined by the collective shortlists of the more than 1,300 buyers the advisory firm covers.