ECM Equity Capital Management raising 300 mln euro flagship fund

  • Investing in firms based in German-speaking Europe
  • Rhode Island weighs 35 mln euro commitment
  • Firm’s realized investments grossed 32.7 pct IRR

ECM Equity Capital Management is marketing its fifth flagship fund with a 300 million euro ($362 million) target, materials from Rhode Island State Investment Commission show.

ECM, which Chris Peisch launched in Frankfurt in 1995, specializes in acquiring majority and minority stakes of companies based in German-speaking Europe. Its previous fund raised 230 million euros in 2012.

The firm typically invests in companies valued up to 100 million euros, with annual revenue of 10 million to 250 million euros.

In December, ECM used its fourth fund to take a stake in a Swiss urology specialist, Uroviva. ECM also backed portfolio company Wieners+Wieners’s acquisition of Apostroph Group, which provides language-translation services.

ECM has performed well, grossing a 32.7 percent internal rate of return and 3.25x multiple on invested capital since its inception, the Rhode Island data shows. Funds II, III and IV generated top-quartile returns for funds raised in their respective vintage years, Cambridge Associates reports.

The terms offered to LPs appear to hew closely to industry standards, Rhode Island documents say. The fund will charge LPs a 2 percent management fee on committed capital during its investment period and 2 percent of invested capital thereafter.

Furthermore, any fee revenue generated through directors, consulting, advisory or transaction services will fully offset the LPs’ management fees.

ECM must return at least 8 percent to investors before it can collect carry, and the general partners’ commitment to the fund will represent at least 2 percent of its total capital.

The commission approved a commitment of up to 35 million euros to the fund at its April 25 meeting.

The firm declined comment.

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A statue of Roger Williams looks out on Providence, Rhode Island, from Prospect Terrace Park. Photo courtesy kickstand/iStock/Getty Images