Billionaire-Backed Fidelio Is Looking for More After 900% Return

(Bloomberg) -- Swedish investment firm Fidelio Capital just scored a more than 10-fold return when it sold its stake in AniCura after seven years of careful nurturing of the animal hospitals and clinics provider.

Backed by funding from Katarina Martinson, the daughter of Swedish billionaire investor and Industrivarden AB Chairman Fredrik Lundberg, Fidelio makes investments with a longer-term outlook than traditional private equity firms, according to Founder and Chief Executive Officer Gabriel Fitzgerald. While private-equity firms typically have an investment horizon of 5-10 years, Fidelio has no time constraints.

"Economic cycles matter in the shorter perspective but if you believe that this is going to be a winning sector over the longer term, and manage to enter at an early stage, then we can still find opportunities,” Fitzgerald said by phone.

With asset prices hovering at record levels following years of unprecedented monetary stimulus and an economic expansion being challenged by capacity constraints, finding a good place to invest can be challenging.

But Fidelio says since its investment mandate has no short-term return requirements, it can still pick winners by targeting smaller companies with less structure, although it’s no venture capital firm. It typically invests in smaller companies and then merges them, something it did with animal hospitals and clinics provider AniCura. Fidelio this week sold its stake in that company for a more than 10-fold return on the original investment.

‘Good Profit’

Fidelio "made a good profit on AniCura" since it created the company in 2011 out of three independent entities "and saw it through all the way to the exit," Fitzgerald said.

Fidelio currently has six investments. They include Lyko, a retail chain for hair care and beauty products, and clothing company NN07. It has also specialized in animal care, with investments such as pharmaceutical company Nextmune.

The cash from AniCura will be returned to Fidelio’s owners, who will be asked for fresh funding when needed, the CEO said. Fidelio last year raised 3 billion kronor ($347 million) from its owners for additional deals. Its initial investment is normally somewhere between 50 million kronor and 700 million kronor, Fitzgerald said.

"We have a number of similar opportunities that we’re currently looking at," Fitzgerald said. "Hopefully we’ll find a similar case as AniCura, where you can build something very large and solid within the foreseeable future."

Nextmune and Indical Bioscience, a provider of molecular and immuno-diagnostic solutions developed for veterinary applications, are two existing investments where Fidelio is pursuing the same strategy as it did with AniCura and in which it will most likely invest more money, the CEO said. The company has also made a new investment that it hasn’t yet announced.

To contact the reporter on this story: Love Liman in Stockholm at jliman1@bloomberg.net

To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net, Niklas Magnusson, Jonas Bergman

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