Verdane nearly doubles firepower after closing latest flagship on hard-cap

The European direct secondaries specialist enjoyed a re-up rate of over 100% for Fund XI.

Verdane, one of Europe’s largest direct secondaries specialists, has closed its latest flagship at nearly twice the size of its 2019-vintage predecessor, Secondaries Investor has learned.

Verdane Capital XI closed on €1.1 billion, according to a statement Secondaries Investor has seen exclusively. That figure is understood to have been the hard-cap communicated to LPs. Its initial target is unclear.

Fund XI was oversubscribed and had a re-up rate of over 100 percent with commitments from public and private pensions, insurers, family offices and government agencies across 21 countries, according to the statement. A significant proportion came from non-profit organisations.

Over 60 LPs – mainly from Europe and the US – committed to Fund XI, the largest number of investors by far across the firm’s vehicles to date, Frida Einarson, partner and head of investor relations at Verdane, told Secondaries Investor.

LPs included Fresno County Employees’ Retirement Association, CT Private Equity Trust and University of Kentucky, Secondaries Investor data shows.

Verdane made a substantial GP commitment to Fund XI, in line with its contributions to prior vehicles, Secondaries Investor understands.

The vehicle will follow the same strategy as its predecessors, picking up both minority and majority positions in either single companies or a portfolio of companies in Northern Europe. These investments will straddle two core themes: digitalisation and decarbonisation, with target sectors including software, consumer internet, energy technology and digital businesses. Its ticket sizes will sit between €20 million and €150 million.

The Oslo-headquartered firm began raising Fund XI in February 2022 and had gathered roughly half of its hard-cap by May last year. Verdane collected SKr6 billion ($613 million; €571 million) for its predecessor in January 2019, per Secondaries Investor data. Fund X had delivered a 1.47x TVPI and 24.91 percent IRR as of 31 March, according to Fresno County Employees’ Retirement Association data.

Einarson noted that, during this latest fundraise, potential LPs focused on how the firm’s direct secondaries strategy – known in-house at Verdane as portfolio acquisitions – would play out amid market uncertainty.

“We have a mandate that allows us to do tailored solutions so we can invest through multi-asset portfolios as well as single-asset transactions,” Einarson said. “We can do minority or majority positions and we’re not dependent on leverage to execute our deals, which investors also could see in our existing funds. LPs were reassured that we had the right toolkit for deployment during volatile times.”

She added that LPs were also keen to understand the firm’s approach to sustainability when performance due diligence on potential deals and the underlying portfolio.

“We’re applying the 2040 test on all of our investments. This ensures that we are taking a long term-view of how our businesses will perform in 2040, when we expect regulations in a number of areas to be more stringent and externalities, like emissions, to be more costly for businesses.”

Verdane has over €6 billion in AUM across its flagship funds, buyout fund series Edda and impact fund Idun. Going forward, its flagship funds will be referred to as Verdane Freya, the Nordic goddess of love and beauty, as a nod to the firm’s Nordic roots.

Verdane ranked 13th in the HEC-DowJones 2022 Mid-Market Buyout Performance Ranking, one of three European firms that made it to the top 20.