3 questions to smart minds

First Time Fundraising and Investment Focus

For this 3 questions to Rafal Grabarkiewicz

Fide­lium Partners
Photo: Rafal Grabarkiewicz
27. June 2017

A new invest­ment company raising its first fund faces some chal­lenges. ‘First time fund­rai­sing’ has become more compe­ti­tive compared to last year. Howe­ver, fund mana­gers also face new inves­tors, family offices. What crite­ria are important for family office inves­tors? Which direc­tion of a new fund seems worthwhile?

For this 3 ques­ti­ons to Foun­der and Mana­ging Part­ner Fide­lium Partners

1. Fide­lium Part­ners is active as a new invest­ment company in Germany. Where is your focus?

Fide­lium Part­ners is an opera­ting inves­tor. We are looking for compa­nies with EUR 30–500m turno­ver across Europe that bene­fit from our indus­trial exper­tise in addi­tion to provi­ding capi­tal. The decisive factor is that there is clear opera­tio­nal poten­tial for impro­ve­ment or that there is a busi­ness chall­enge to be mastered.

These are often compa­nies with below-average profi­ta­bi­lity for the respec­tive indus­try, which can be increased through invest­ments and sustainable opera­tio­nal impro­ve­ment measu­res. Carve-outs from corpo­rate groups are also among the very typi­cal invest­ment situa­tions. We have many years of expe­ri­ence in relia­bly leading margi­nal areas, which are no longer part of the core busi­ness, into medium-sized inde­pen­dence. Often this is e.g. only one produc­tion site, which must be supple­men­ted by the manage­ment team, sales, admi­nis­tra­tion, etc.. But also other special situa­tions like espw. Succes­sion solu­ti­ons or restruc­tu­ring cases bene­fit from our approach.

As a rule, banks are very reluc­tant to finance such tran­sac­tions. We are ther­e­fore happy to finance acqui­si­ti­ons enti­rely with equity (usually up to EUR 20m per invest­ment), which also signi­fi­cantly increa­ses tran­sac­tion secu­rity and speed.

2. In which areas/sectors do you see oppor­tu­ni­ties for investments?

In prin­ci­ple, Fide­lium Part­ners invests across all indus­try sectors. Howe­ver, opera­tio­nal impro­ve­ment poten­tial can always be reali­zed well if the company’s depth of value crea­tion is as great as possi­ble. — That’s why we focus on indus­tri­als, chemi­cals, consu­mer goods, busi­ness services and TMT, but do not exclude any sectors.

More important than the sector, howe­ver, is the situa­tion. We are looking for the combi­na­tion of a healthy company core on the one hand and the opera­tio­nal impro­ve­ment poten­tial, the entre­pre­neu­rial chall­enge on the other hand. Where there is a prag­ma­tic manage­ment team ready and eager for the task, we are happy to work with them. Where this is miss­ing, we step in.

3. How did you imple­ment fund­rai­sing? What is the compo­si­tion of your investors?

We differ from the typi­cal finan­cial inves­tor not only in our approach but also in our fund struc­ture: The capi­tal is not provi­ded by insti­tu­tio­nal asset mana­gers but by major German entre­pre­neu­rial fami­lies. This is also reflec­ted in the long-term nature of the fund. When evalua­ting an invest­ment, we do not think for a minute whether and how we can resell the company in a few years. The trans­for­ma­tion of a company requi­res — in addi­tion to active support — pati­ence and long-term capi­tal. Ther­e­fore, the first inte­rim sett­le­ment is not for 12 years and even then without the need for an exit. In addi­tion, the foun­ders and the entire Fide­lium team make it a point to directly and perso­nally parti­ci­pate substan­ti­ally in every investment.

It is also worth mentio­ning that — in contrast to what is custo­mary in the indus­try — this is a fully German-based fund structure.

About Rafal Grab­ar­kie­wicz

Rafal Grab­ar­kie­wicz is the foun­der and mana­ging part­ner at Fide­lium. He has over 14 years of expe­ri­ence in the invest­ment focus of Fidelium.

Most recently, he was Mana­ging Direc­tor at Aure­lius Equity Oppor­tu­ni­ties SE & Co KGaA for more than seven years. There he was respon­si­ble for a large number of invest­ments in which spin-offs from peri­phe­ral divi­si­ons of inter­na­tio­nal corpo­ra­ti­ons were led into medium-sized inde­pen­dence. The tran­sac­tions, which are gene­rally cross-border, have been charac­te­ri­zed by a high degree of comple­xity in which seller-speci­fic requi­re­ments have been imple­men­ted. Further­more, he has made a number of invest­ments in medium-sized special and succes­sion situations.

Previously, Rafal Grab­ar­kie­wicz worked in Invest­ment Banking at Morgan Stan­ley in Frank­furt, where he advi­sed on nume­rous M&A tran­sac­tions and corpo­rate finan­cings. He found his career start in manage­ment consul­ting. There Rafal Grab­ar­kie­wicz supported manage­ment teams of Euro­pean corpo­ra­ti­ons in the imple­men­ta­tion of restruc­tu­ring and growth projects. Rafal Grab­ar­kie­wicz studied in Gies­sen, Aber­deen, Cape Town, Fontaine­bleau, Singa­pore and Phil­adel­phia and holds a Master of Busi­ness Admi­nis­tra­tion (MBA) from INSEAD.

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