Three Hills raises €300m for lower mid-market impact fund

Three Hills has raised €300m (£261.9m) of committed capital for its lower mid-market impact fund at final close.

The Three Hills Impact fund backs sustainable mid-market businesses in Europe and North America through flexible capital, with downside protection and less dilutive structures for entrepreneurs. It has a particular focus on Italy, Spain, France and the UK, targeting businesses with enterprise values of €30m to €200m.

According to the €3.3bn private markets investment firm, committed capital for the fund includes co-investment and managed vehicles. The fund has attracted backing from Italian, European and North American pension funds, insurance companies and family offices.

“Sustainability has been deeply embedded in Three Hills’ DNA from the very beginning, with most of our investments to date deployed in businesses delivering tangible environmental or social benefits,” said Stefanie Kneer, Three Hills’ head of environmental, social and governance and sustainability. “From our early investments in circular economy pioneers back in 2009 to the entrepreneur-led companies we support today, our focus has always been on partnering with growth-oriented founders and management teams whose ambitions extend well beyond financial performance.”

Three Hills said investment tickets typically range from €10m to €30m. These are aligned with the impact themes “people, planet or progress” and are underpinned by selected UN Sustainable Development Goals.

Since launch, the fund has invested in a portfolio of five companies, including ISFA, an agricultural investment platform in the Iberian peninsula, and Smartbox, a UK-headquartered business offering assistive speech and communication technologies.

“The launch of Three Hills Impact is a natural evolution of our investment heritage, which will allow our team to more effectively capture opportunities in the lower middle market and to formalise the impact principles that have long underpinned our investment approach,” said Mauro Moretti, Three Hills’ founder and chief executive.