Leon Capital, with Blackstone and KKR pedigree, eyes debut pledge fund

Leon Capital, formed by executives from Blackstone, KKR and McKinsey, is preparing its debut fund for investments in mid-market tech-enabled services in Western Europe, sources told Buyouts.

Leon is among a handful of first-timers moving into the tough fundraising environment that is favoring existing relationships and established funds over newcomers. As economic uncertainty persists, LPs tend to stick with their well-established relationships.

Still, first-timers and emerging managers are finding ways to attract capital. One successful strategy is spin-outs from larger firms, or teams made up of partners who already have strong LP relationships.

Leon Capital is planning to raise a pledge fund as its initial pool, potentially targeting up to €250 million, one of the sources said. The pledge fund structure allows LPs to commit to a closed-end fund, but with the ability to pick and choose which deals they want to support. In this way, the pledge fund is said to present less “blind-pool” risk than a traditional PE fund.

Leon Capital was formed this year by Jean-Christophe Napoleon Bonaparte, who previously worked at Blackstone and Advent International; Christos Lavidas, who formerly worked at KKR and a large global hedge fund with a private equity team; and Michael Youtsos, a former partner at McKinsey & Co, who led sustainable investing practice in Europe.

The firm will target investments in healthcare services, business services, software and energy transition. It will make control investments in family-founder-owned businesses with equity checks of €15 million to €100 million, sources said.

Last year, some 553 first-time funds collected more than $46 billion globally, Preqin reports. That was down from the $52.8 billion raised by 572 funds globally in 2020. The peak was in 2017, when 924 funds globally raised $196.7 billion, according to Preqin’s information.

Other first-timers raising funds this year include Riverspan Partners, likely targeting $650 million for its debut pool, and Lone View Capital, targeting around $925 million for its first fund.

Read more here on Buyouts’ Emerging Managers page.