Polaris Flexible Capital

Polaris Flexible Capital I, is an independent closed-end investment fund, which focusses on investments within the junior tiers of the capital structure and minority equity positions.

The fund applies a flexible investment approach and are able to tailor bespoke investments solutions in order to accommodate the specific needs of the companies we partner with.

The investment strategy consists of three main components

1.

Junior loan / Mezzanine / Preferred equity

2.

Minority equity

3.

Opportunistic listed credit opportunities

Video presentation of Polaris Flexible Capital.
In Danish

Tailored financing made possible by applying a Flexible investment strategy

Investment focus across the capital structure

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  • PFC will target investment opportunities across the capital structure by applying a solution-oriented investment approach
  • Strategy is to tailor bespoke investment solutions that best suit the specific needs and include value protective attributes to optimize overall risk / return profile
Core focus

Junior financing

Characteristics
  • Junior tiers of the capital structure, including contractual or structurally subordinated capital tailored to the specific situation
  • Contractually agreed return either in the form of cash or rolled-up interest
  • Selective equity-based return participation (e.g., via warrants) in order to leverage on due diligence and knowledge and to optimize overall return
Value to the companies we partner with
  • Capital structure tailored to the specific situation
  • Optimizing capital flexibility and enhancing maneuverability
  • Facilitating expansion while preserving liquidity for growth
  • Consolidation of ownership (enabling buy-out of minority shareholders)
  • Allowing for new bank financing by providing increased capital cushion
Core focus

Minority equity

Characteristics
  • Non-control equity investments
  • Clear alignment of objectives with main/other shareholders
  • Pre-defined exit mechanics in order to ensure liquidity within fund term
  • Could include put-optionality to protect value of investment in the event of negative deviations from business plan
Value to the companies we partner with
  • Cooperation with Polaris as a knowledge-driven investor with focus on value creation through operational improvements
  • Access to network and expertise within execution of transformational changes and M&A-driven growth
  • Strenghtening capital structure
  • Facilitating successions without financially compromizing the company
Opportunistic

Listed credit opportunities

Characteristics
  • Leveraging on PFC’s general knowledge about credit markets
  • Ability to pursue special-situation listed credit opportunities
  • Typically related to dislocations related to single sector / company-specific events
Rationale
  • Ability to extract value from temporary capital dislocations within credit markets and to leverage on the knowledge and insights from the bilateral investments
  • The liquid markets make it possible to act speedily as opportunities arise e.g., temporary credit market dislocations
  • Broaden investment scope which complements the bilateral investments
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Management team

The investment team responsible for the fund is Jesper Langmack (Partner & Head of Polaris Flexible Capital) and Kent Brovn Arp (Partner, Polaris Flexible Capital).

The two partners have made investments within the focus of the fund for a long period and has worked closely together before forming Polaris Flexible Capital. The team will be expanded during 2022.

The fund held first close in January 2022 and is currently actively fund raising.

Typical situations...

where PFC can financially facilitate successful corporate development

Growth / transformation

  • Capital for strategic repositioning
  • Financing of large and transformative acquisitions
  • Refinancing allowing for capital structure optimization and consolidation of shareholder base
  • Continued organic and acquisitive development of mature mid-market companies

Sponsor-led acquisitions

  • Leveraged Buy-Out transactions led by experienced sponsors
  • Bolt-on acquisitions to current platforms
  • Re-capitalizations of low-leveraged companies or re-financing of over-leveraged companies
  • Management-led transactions

Special situations

(incl. pre-IPO placements)
  • Successions, equity release, and reshaping of shareholder structure
  • Liquidity for key business stakeholders
  • Positions from forced sellers
  • Re-shaping of ownership structures, e.g. family-owned businesses and other key stakeholders
  • Companies preparing for IPO

Key Investment Criteria

The fund will have a Nordic investment focus and will be looking to make investments with fits the below listed investment characteristic.

Size

  • Company size (Enterprise Value) in excess of DKK 200m
  • PFC investment size ranging from DKK 50 – 200m

Sector / Geography

  • Sector-agnostic approach - Focus on portfolio diversification across sectors
  • Nordic investment focus, likely majority in Denmark / Sweden

Credit / investment story

  • Clearly defined and expressed strategy. Positive operational cash flow
  • Likely to include expansion, acquisitions, or other strategic transformation

Owner commitment

  • Proven capabilities and sector-anchored experience
  • Ability and willingness to financially and managerially support investments
  • Counterparty diversification

Investment horizon

  • Tailored to fit the need of the specific situation and typically up to 7 year
  • Target hold period of 2 - 5 years

Sustainability

  • Within mandate (exclusion criteria)
  • Reputable investment partner and adequate governance
  • Annual sustainability review and update

Target return

  • Risk-adjusted approach to evaluate return reflecting transaction-specific factors
  • Focus on downside-protective characteristics and selective upside participation

Contact

Jesper Langmack

+45 3058 4684

Kent Brovn Arp

+45 2131 7358

Peter Høltermand

+45 4086 0665

Jan Johan Kühl

+45 3525 3462
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