A year after the launch of Lightrock’s first public fund, fund managers Chris Kaashoek and Maarten Vankan say that in 2023, the adventure led them to the British private equity investor. “We were given a unique opportunity to build an asset manager from the ground up.”
In April 2023, Chris Kaashoek (left in the photo), Maarten Vankan (right in the photo), and Luuk Jagtenberg announced they would hand over the management of the Kempen Global Small-cap Fund to others. Michiel van Dijk, who co-managed the Kempen Orange Fund among others, also stepped down.
Not long after, it became clear that the team would be joining Lightrock, a global impact investor focused on purpose-driven private companies. Lightrock is a spin-off from LGT, the international private banking and asset management group of the Principality of Liechtenstein.
Two words
Now, two years later, the smallcap specialists need just two words to explain their move: culture and adventure.
“Leaving Kempen wasn’t easy, but we were given the unique opportunity to build an asset manager from scratch,” Vankan said in a conversation with Investment Officer. “And we were also deeply attracted to Lightrock’s profile as an entrepreneurial, young company.”
Keeping the team together was important to them, Kaashoek adds. “We’ve known each other a long time and have been through challenging periods over the past ten years, both in the markets and in our personal lives. That’s created a deep level of trust. It formed the foundation for us to take on this entrepreneurial adventure.”
In April last year, the Global Small-Cap Fund was launched. The team raised over 200 million euros in external capital, thanks in part to interest from family offices in the Netherlands, Belgium, and Switzerland. Lightrock also provided the team with 400 million euros in seed capital. Vankan: “There’s a lot of support, not only from Lightrock’s board but also from its founder, Prince Max of Liechtenstein, while we retain full autonomy in our investment processes.”
A stronger focus on value than most
The team invests in companies—currently 36—with market capitalizations between 500 million and 15 billion euros. They seek companies trading below intrinsic value, with “very strong governance” and defensible positions in niche markets. Or, as Vankan sums up their selection criteria: “quality at an attractive price.”
In this regard, Lightrock aims to stand out from similar funds in the market. “Most smallcap funds globally are more growth-oriented, while we have a stronger focus on value,” said Vankan.
That long-term shareholder engagement translates into at least four hundred points of contact per year with portfolio companies, according to Kaashoek. “We speak with all of our companies each quarter—more often if needed. Just last year, we visited seventy percent of them. I think we know our companies better than the average fund manager.”
Against the grain
Lightrock’s decision to launch a public fund might seem surprising at first, given its private market focus. Moreover, the industry has largely shifted its attention to opportunities in private markets and new funds in that space.
At the same time, there has been a long-term shift in public markets from active to passive investing. Kaashoek believes this trend has made certain public market segments particularly attractive. “In Lightrock’s view, smallcaps are part of that. We regularly come across great companies trading at appealing valuations. Ultimately, the philosophy is the same for both public and private funds.”
According to Kaashoek, Lightrock’s fund platform has plenty of room for a second or third strategy, though he believes it’s far too early to talk about that. “Besides, our team’s focus will always remain on global smallcaps.”
A volatile climate
The experts at Lightrock acknowledge that they are investing in a sector currently facing headwinds. Over the past ten years, smallcaps have clearly underperformed compared to largecaps, partly due to the dominance of the Magnificent Seven. “It’s hard to predict what the market will look like in five to ten years—we don’t have a crystal ball,” Vankan says.
As for the uncertainty stemming from the new U.S. administration and the proposed import tariffs, he adds: “We’re speaking with dozens of companies in the U.S. that are struggling to make investment decisions right now. But we know how to navigate periods like this. The more volatile the environment, the more opportunities there are for active managers. Every era has its own challenges and opportunities.”
That’s why Lightrock primarily invests in market leaders, Kaashoek explains. “Companies like these tend to emerge stronger from periods of stress or crisis.”