Strategy
Quest for Growth invests in both quoted and private growth companies. Quest for Growth will invest at least 70% of its assets in quoted companies with a market capitalization of less than € 1,5 billion or in private companies. At least 25% of the assets will be invested in private companies. Quest for Growth will target an exposure to unquoted equity (direct and indirect via venture & growth funds) of between 45% and 55%. Investments are chiefly made by shares and convertible loans.
Geographically, Quest for Growth mainly focuses on European companies.
Given the desire to invest in growth companies, the focus lies on industries and themes that are expected to be capable of higher than average growth. Quest for Growth has three central areas of investment, being digital (information and communication technology), health (technology for the healthcare sector) and cleantech (clean technology).
Diversification
Quoted equities
Quest for Growth’s quoted portfolio is 100% actively managed and does not follow any reference index or benchmark. Stock selection is based on fundamental analysis. Important investment criteria are: financial strength, growth prospects, market position, management strength and valuation. The preference lies in long-term investments in growth companies with an attractive valuation.
Most of the shares within the portfolio are in companies with a small or mid sized market capitalisation (small & mid caps). Quest for Growth believes it is very important to maintain personal contact with the management of these companies. In addition to mid caps, Quest for Growth may also invest in large companies to a certain degree, thus improving the liquidity of part of the portfolio.
Balanced diversification among the various industries is a goal. The portfolio is diversified but selective, with investments in 20 to 30 different companies. The holding in any individual company is in principle no more than 5% of the net asset value.
Venture & Growth Capital
Quest for Growth is able, on a selective basis, to co-invest together with the venture capital funds of Capricorn Partners, which can result in Quest for Growth increasing its exposure to companies in which investments have already been made. This will usually be done in a later phase of the company’s development. These kinds of investments are initially decided on by the board of directors of Quest for Growth.
The aim with regard to unlisted equities is to create capital gains by means of takeovers by other market players or in the course of exit (i.e. disposing of the shares in the company) by means of an IPO on the stock market.
Venture & Growth Funds
Investments in unquoted equities will increasingly be made via venture capital funds of Capricorn Partners, which is Quest for Growth’s asset manager. Decisions on whether to undertake investments in these funds are taken by the board of directors of Quest for Growth. The aim is to acquire significant holdings in businesses via these funds, whereby the manager plays an active role on the board of directors and in supporting those businesses’ management. This strategy is designed to ensure a higher influx of investment files and more thorough supervision of the investments in unlisted shares, with the ultimate aim of further improving Quest for Growth’s future results.
As regards investments in third-party funds, a similar strategy has been pursued as for direct holdings in unlisted companies, but there will be no investments in new funds. Past obligations will be honoured.
Quest for Growth has committed to investing:
€ 2.5 million in Capricorn Cleantech Fund
€ 15 million in Capricorn Health-tech Fund
€ 11.5 million in Capricorn ICT Arkiv
€ 20 million in Capricorn Sustainable Chemistry Fund
€ 15 million in Capricorn Digital Growth Fund
€ 7.6 million in Capricorn Fusion China Fund
This gives Quest for Growth exposure to growth companies in the three selected investment areas of Cleantech/Sustainable Chemistry, Health and Digital, each via a specialised venture capital fund of Capricorn Partners.
These Capricorn funds in which Quest for Growth invests also strive to create capital gains by eventually selling the companies in their portfolio or listing them at the stock exchange.