- H.I.G. Capital closed its oversubscribed Europe Capital Partners IV fund at €1.6bn in a first and final close completed in six months.
- The fund targets control investments in Western Europe’s lower middle market, focusing on complex or undermanaged businesses with ~€50m average equity checks.
- Commitments came from a global LP base spanning North America, Europe, the Middle East and Asia.
- Fund IV is a step up from the €1.1bn Fund III (2020), signaling stronger investor confidence in this strategy.
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The closing of H.I.G. Europe Capital Partners IV at €1.6 billion represents both a quantitative and strategic milestone for the firm in its European lower middle market franchise. Compared with its predecessor, Fund III (which closed at €1.1 billion in 2020), Fund IV is roughly 45% larger, indicating increased LP trust and a larger opportunity set.
Fund IV is explicitly targeted toward “undermanaged” businesses and operationally complex scenarios. The firm plans to deploy capital through control investments with equity checks averaging ~€50 million, in companies up to €250 million valuation, generating between €10–35 million in EBITDA. This implies a disciplined, mid-market value-creation strategy with a moderate ticket size that sits above pure small-capital plays, but below upper mid-market exposure.
Fundraise timing—oversubscribed in six months—suggests strong demand amidst crowded fundraising markets. The global LP reach (Asia, Middle East, Americas) is also notable, especially as U.S. and European LPs have been more selective. Robust cross-border LP interest underscores H.I.G.’s positioning in an environment where yield is sought via specialty/private alternatives rather than broad markets.
Strategic implications include: 1) H.I.G. doubling down on its lower middle market strategy, which may lead to intensified competition for these assets; 2) scaling challenges—managing ~25-30 investments with average check size of €50 million requires strong deal flow, execution capabilities, and local presence; 3) potential exit pressures: given the high multiple environment and regulatory/geopolitical uncertainty in Europe (trade, supply chain, regulation), exits may require patience; 4) risk that inflation, interest rates, and macroeconomic headwinds could compress valuations or slow deal closing.
Open questions remain: How will H.I.G. source complex or undermanaged businesses in a competitive lower middle market? What sector betas are implicit in its strategy, especially in industrials, healthcare and tech? Can H.I.G.’s team—advised at ~150 investment professionals—manage scaling operational involvement without dilution of performance? Also, where will exits be feasible over the 4-7 year horizon, and how will recent regulatory concerns in Europe affect deal execution and return expectations?
Supporting Notes
- Fund IV obtained aggregate capital commitments of €1.6 billion in its first and final close, oversubscribed, within about six months of launch.
- H.I.G. has $74 billion in total assets under management; Fund IV leverages this global scale.
- Fund IV focuses on control investments in European lower middle market companies, particularly undermanaged businesses or in complex/special situations.
- Typical target company profile: up to €250 million in enterprise value; €10-35 million in EBITDA; equity checks averaging ~€50 million.
- Geographic presence in Europe: 150 investment professionals across offices in London, Milan, Hamburg, Paris, and Madrid.
- The predecessor fund, Fund III, closed in 2020 with €1.1 billion commitments, showing the precedent strategy and baseline.