NeSBIC Groep is in the process of raising a fund to provide what it describes as “value-added venture capital for IT, telecoms and media”. The NeSBIC Converging Technologies Europe (CTE) Fund is targeting DFl 100 million (ecu 45 million), 32.5% of which will be provided by NeSBIC’s parent Fortis. The balance is being marketed to international, primarily European institutional investors, and NeSBIC expects to hold a first closing during the summer.
Technology convergence is defined as the gradual integration of IT, telecommunications and media. The managers of NeSBIC CTE Fund aim to produce net returns in excess of 25% per annum through investment in areas such as: information software/groupware applications, content and services; on-line Internet and intranet applications, content and services; digital multimedia content, tools and enabling technologies; telephony software applications; advances in data communications, telecommunications and wireless technologies; value-added-service providers in niche markets; education/entertainment applications, content and services; and interactive content publishing.
The fund will target young fast-growing European companies with a proven technology, a business model and a demonstrable track record. Potential investees will normally have turnovers in the ecu 5 million to ecu 25 million range, although smaller companies may be considered in some circumstances. NeSBIC CTE Fund will invest from ecu 500,000 to ecu 5 million, with most deals falling in the ecu 1.5 million to ecu 3 million range, for stakes of between 10% and 49%.
Robert Wilhelm, Frank Verschoor and Floris van Alkemade form the fund’s management team; they will later be joined by a fourth executive. The value-added component of the fund lies in this team’s strong operational background in IT and telecommunications, combined with NeSBIC’s venture capital and M&A expertise. An advisory board consisting of professionals from the fund’s target industry segments will provide further advice and support.
The NeSBIC CTE Fund’s investment remit is pan-European. Robert Wilhelm said the managers expect the vehicle to be particularly active in the Benelux countries, where it will be able to capitalise on NeSBIC’s strong network, and in Scandinavia, where growth and development in the telecommunications market is particularly strong. However, NeSBIC believes that the opportunities for investment in converging technologies throughout Europe are enormous, as the sector is still under-funded in comparison to the US, despite the recent upsurge in investor interest.
The NeSBIC CTE Fund succeeds three previous NeSBIC venture funds with broader technology focus. The most recent of these, an internal Fortis programme managed by other members of the NeSBIC team, will continue to invest following the closing of the NeSBIC CTE Fund. NeSBIC has also raised four development capital/MBO funds to date and currently has private equity capital totalling more than ecu 200 million under management.