Geocapital’s Debut EuroFund Beats Target

Geocapital Partners’ first dedicated European Fund exceeded its original $50 million (euro 45 million) target by $3.7 million at its first close last December. The vehicle, which will focus on small, established European computer software and information service companies, will hold a final close on a maximum of $70 million to $75 million in the early months of this year.

Geocapital has appointed Colin Amies, previously a partner with Advent Limited, and Nic Humphries, formerly of Barclays Private Equity as general partners of Geocapital Europe. Regent Associates, the UK-based specialist M&A adviser to European information technology companies, is acting as the fund’s specialist general partner and will provide assistance with deal flow, industry evaluation and local knowledge, as well as support with exit opportunities.

Colin Amies said “Regent, which is now much the same size as Broadview was when Geocapital linked with them in the US, is a highly appropriate associate for our planned activities in Europe”. Regent has offices in France, Germany and Italy, as well as in India, Israel and the US, while its links with IDG Group, which has offices throughout Europe, extend its coverage of the Continental markets.

Geocapital Eurofund is allowed to invest anywhere in Europe, but Colin Amies emphasised that it will not specifically target investment in Eastern Europe or the less developed Western European venture markets. The managers will initially concentrate on UK opportunities, expanding their activities stage by stage into other markets with established venture capital modes, particularly Germany, France, the Netherlands, Benelux, Ireland and Scandinavia.

The fund will avoid start-up investments, focusing on active businesses in the computer software and information services sectors. “. Internet services are likely to be a particular focus for the fund. Few, if any, investments will be made in hardware companies, which Colin Amies said are incidental to Geocapital’s strategy: “We aren’t black box builders”.

Geocapital Eurofund will normally provide between $1 million and $5 million of equity to investees companies in venture or development capital situations. Colin Amies said that, while a few pre-IPO fundings might be included in the fund’s portfolio, the bulk of its investments would feature companies at an earlier stage of development. Geocapital Eurofund will not use leverage in its investments.

Investors signing up for the first close included several limited partners in earlier Geocapital US funds, among them INVESCO Private Capital, GTE Corporation and Sovereign Financial Services Inc. UK participants include Candover Investments, West Midlands Pension Fund and Westpool Investment Trust, all of whom are new to Geocapital, along with several private investors. Colin Amies reported that the first closing capital was weighted towards the US. Geocapital Eurofund is encountering continued strong interest from investors, but Geocapital does not plan to increase the cap level it has set, given the investment size parameters of the fund.

Geocapital also closed Geocapital V, its latest US fund, on $225 million in December, taking total capital under management to around $500 million. Geocapital’s previous US funds, which have achieved consistent top quartile returns, have made four investments in the UK. Taking the new US fund into account, Geocapital Partners has the capacity to invest more than $100 million in the European IT sector.