New billion kroner equity fund will target growth-hungry companies

Danica Pension has set up GRO Capital fund to inject equity into medium-sized companies

The pension company Danica is setting up a new fund that will inject sorely needed capital into companies hungry for growth, Børsen reports.

Danica is investing one billion kroner into the new fund, GRO Capital, and the pension giant’s CFO is optimistic about its prospects. ”We feel that this is a silver bullet,” he said.

“We can play a part in loosening up for the budding growth that we can see in the Danish business sector and at the same time create a good return for our clients.”

New investment model
GRO Capital will be unlike other types of corporate financing entities. It will act as an equity fund with its own management, seeking out medium-sized companies with a turnover of 150 million kroner or more. But unlike other equity funds, it will allow the owners of the target companies to retain the majority of shares in their enterprise and thereby the control of the company.

The idea is to put companies in the position, in terms of  equity requirements, to get accepted for bank loans when they want to buy out competitors, conquer new markets, or otherwise pursue growth.

Welcome news
News of the new kid on the block has been met with enthusiasm from industry. “There’s definitely a need for more financing for medium-sized companies,” Sidsel Dyrholm Holst from the industrial advocate group Dansk Industri told Børsen.

“This group needs capital to implement global ventures, product development and larger investments. So it’s therefore important that they get equity injections. That will make it easier to open doors at the banks.”

Holst is also of the opinion that the plan to allow company owners to retain control would also be popular. “A set-up with the investor as a minority shareholder will definitely be well received,” he said.

GRO Capital’s plan is to make an exit from investments after three to five years.





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