“Golding Secondaries 2022 Fund aims to achieve a net IRR of around 15 per cent through consistent individual investments and value creation driven by operations over time”, Richard Wilmes, Managing Director and Head of Secondaries of Golding Capital Partners, said to BeBeez International. “However, it’s a target we believe we can exceed. We have been operating for more than 10 years in the secondary sector without having lost money on any investment and generate an IRR of around 30%”.
Golding is a Munich-based asset management firm with a focus on private capital transactions for the sectors of infrastructure, private credit, private equity, the private equity secondary market and impact investing. In early 2022, Golding attracted committments worth €280 million for its first pan-European secondary private equity fund (see here the press release) and last year launched Golding Secondaries 2022 for which it announced in September a first closing of €170 million ahead of a €500 million hard cap set for 2024 (see here the press release). Earlier in June, the firm also appointed Laura Tardino for heading its Milan Office (see here a previous article by BeBeez).
Earlier in June, Tardino said to BeBeez Magazine: “Our secondary private equity funds generated yield of 35 percent despite the inherently lower risk profile of such product. Investing in the secondary also mitigates blind pool risks and the J-curve effect, i.e. the period to wait before the investment returns. Investors on the primary have already selected underlying businesses or assets and thus gone through the less profitable initial phase.”
Wilmes pointed out that the firm aims to carry-on secondary market acquisitions of private equity investments that target SMEs with ebitda of EUR 2 – 15 million. Apheon (fka Ergon), Stirling Square, ProA and Xenon are some of the funds operating in Italy or with a strong presence in the country in which the company has already invested.
Golding’s main areas of interest are business services, corporate digitisation and B2B software. “These businesses are much less cyclical than others and their fragmentation allows for buy-and-build strategies. In our transactions we mainly focus on the specific features of mid-market companies. Although the micro aspect is generally much more important to us than the macro one, at Goldings we favour sectors with structurally positive long-term trends with consolidation opportunities such as demographics and digitalisation (and often their combination). In general, we invest in relatively stable and mature economies in Western Europe and residually in North America.
Wilems also said, “There are many exciting SMEs in the Italian market. The full expression of their potential is a challenge that our approach of working with the most successful local GPs can meet. Our network and experience allow us to combine a more international perspective with the knowledge of the local features of assets and entrepreneurs. Furthermore, we have increased our already considerable activity in the segment of GP-led transactions, which is proving to be very attractive. These transactions allow us to work with our favourite GPs, select their best portfolio companies and support them longer with capital injections. This strategy provides a much lower risk than traditional M&A processes and is very attractive for those portfolio firms that can continue their development process. Furthermore, the GPs can offer a liquidity option to their existing LPs at a time when many of them receive a limited amount of cash through traditional channels. These are win-win situations, so their market will grow significantly “.
Wilems also pointed out that the small-mid cap segment had proven its resilience against rising interest rates. This segment has lower leverage than larger buy-outs, and such companies’ operational growth offers upside prospects.
