- H.I.G. Capital closed its oversubscribed European Lower Middle Market Fund IV at 7.6bn (about $1.87bn) in a six-month first-and-final close.
- The fund will make 25630 control investments in Western Europe, targeting companies up to 7.250m EV and 7.10635m EBITDA with ~7.50m average equity checks.
- It will focus on business services, industrials, healthcare, consumer/retail and TMT, leveraging a 150-person European team across major offices.
- The strategy emphasizes operationally complex, under-managed deals and carve-outs, supported by themes like defense and infrastructure tailwinds and broad global LP demand.
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H.I.G.’s successful closing of Fund IV at €1.6 billion marks a significant upgrade from its predecessor, which closed at ~€1.1 billion in 2020, underscoring growing investor conviction in European lower-midmarket private equity as macro uncertainties and deal complexity rise. Despite inflation, geopolitical risk, and tight credit conditions across Europe, fund-raising was rapid and oversubscribed, suggesting that LPs are seeking differentiated return profiles and willing to pay for operational expertise and control strategies.
The fund’s investment parameters (control deals, complex situations, EV up to €250 million, EBITDA in the €10-35 million band) signal that H.I.G. anticipates a rich opportunity set among companies strained either by dislocation, Spain’s industrial transition, disruptions in supply chains, or those caught in carve-out or turnaround scenarios. This is bolstered by rising defense, infrastructure, and reshoring trends in Europe which are generating both green-field investment and carve-outs.
Strategically, H.I.G. is leaning into its operational value-creation capabilities. The emphasis on “undermanaged businesses”, slower or neglected segments, and “operationally complex” transactions suggests H.I.G. is differentiating itself from pure financial sponsors by focusing on deep intervention. With 150 investment professionals in Europe and 19 years of history in the region, it appears their platform is built to support this hands-on approach.
From the LP perspective, the broad global investor base (asset managers, pensions, sovereign wealth funds, family offices, etc.) willing to commit in a difficult fundraising environment signals strong risk appetite in search of alpha. Also, H.I.G. wrapping up in six months, especially as a first and final close, shows strong deal flow visibility and LP confidence in its pipeline.
Open questions include: how H.I.G. will source sufficient high-quality, complex lower-midmarket deals amidst competition; whether rising interest rates or supply chain pressures will compress margins; how exit markets (M&A, IPOs) will perform for such portfolio companies; and how geopolitical risk, especially in defense and infrastructure, will affect valuation multiples and regulatory oversight.
Supporting Notes
- Fund IV closed with aggregate commitments of €1.6 billion, equivalent to approximately US$1.87 billion, in a first and final close and was oversubscribed.
- Fundraised in ~6 months.
- LP base includes existing and new limited partners globally: asset managers, public and corporate pensions, endowments, family offices, sovereign wealth funds, consultants from North America, Europe, Middle East, Asia.
- Targeting 25-30 control investments in Western Europe, in companies up to ~€250 million enterprise value, with EBITDA roughly €10-35 million. Equity checks average ~€50 million per deal.
- Sectors of focus: business services; industrials; healthcare; consumer & retail; technology/media/telecom (TMT).
- H.I.G.’s European team has ~150 investment professionals, with offices in London, Milan, Hamburg, Paris, and Madrid; 19 years of operations in region; since 2007 — 92 platform investments in Europe under lower middle-market and middle market strategies.
- H.I.G. Capital manages ~$74 billion in total assets under management.
- Fragmented markets, complex transaction dynamics, carve-outs, and geopolitical tailwinds (defense, infrastructure) cited as favorable investment backdrops.