Luca Severo on founding distressed and special situations fund Hoplon

Subtitle

Luca discusses the challenges and rewards of starting a new fund, why he chose a career in distressed investing and what 2021 has in store for Hoplon.

Luca Severo

Jane Richards

Luca is currently the Managing Partner at Hoplon Investment Partners, an independent investment firm focused on investing in small and medium-sized asset-backed distressed and special opportunities across Europe. He founded the firm in 2019 with Sven Hanson.  Here he talks about some of the challenges and rewards of starting a fund, what drew him to distressed investing and what it takes to succeed in a start-up environment.

You founded Hoplon in 2019, can you explain how that came about and a bit about your investment strategy?

Certainly. It was the natural development of nearly 10 years spent investing in Europe for our previous employer, a US multi billion fund. Our former boss appreciated the way we invested for him and the network we had built for his fund and gave us the opportunity to launch our own investment company through a friendly spin-out. He is our first anchor investor, beside being a mentor and an ever-supporting sponsor. I also believe it is the natural development of my buyside career, at least the way I have always planned it to be. 

The strategy is a continuation of our previous mandate. We focus on European small to mid-sized opportunities both in distressed debt and in real assets special situations. We like asset rich industries and prefer certain jurisdictions over others (Germany, Scandinavia, UK/Ireland and Benelux). It’s really just a straight and old-style distressed/special situations strategy. 

What have been the biggest challenges of starting a new fund?

You need to get up to speed on a whole host of topics and areas that you are not really exposed to when you are in a “front office” role, especially in a big fund. It’s a mix of legal, regulatory and organizational/entrepreneurial items that you have to be on top of. And of course, fund raising. A totally different skillset and a very time-consuming activity especially at the start.

And what’s been the most rewarding?

The continuous learning throughout the whole process. And of course, being able to launch, and starting our own business with the culture, the ideas and the values we feel are important. Forming a team and seeing it growing and acquiring its own distinctive traits is a continuous reward, and one that we want to last beyond Hoplon.

You’re currently part of a small, entrepreneurial team but you started your career at a global bank, two very different environments.  What attributes do you think someone needs to succeed at a start-up?

I had the luck of experiencing the entrepreneurial spirit already before launching Hoplon. At Wayzata we were still a two-man band in Europe even if we had a multi-billion fund behind us. Overall, entrepreneurial spirit, curiosity and critical judgement are the most important attributes. In a small fund you are on your own and the lack of the infrastructure around you shouldn’t be felt as a limitation but as a source of opportunity. Certainly, you need to develop fast the critical judgement to understand the big picture and estimate the marginal value of every step you are considering. 

Your very early career was as an M&A banker, what attracted you to distressed investing?

I believe it’s one of the few strategies where you can still create alpha and where technological advancements won’t represent existential threats. The mix of financial and legal analysis, and the fast-paced deals vis-a-vis private equity were also key attractions in my early career choices. 

Finally, what’s next for Hoplon in 2021?

Being a start-up we will have more than one objective for 2021. On one side we will push hard to complete our fund raise in the first half of the year. On the other side we will continue focusing on investing - we have already made eight investments and completed two realisations since launch. We will work hard on sourcing and analysing new opportunities to successfully deploy more capital. and aim to gradually grow our team to sustain and foster the development of Hoplon and to prepare the ground for Fund 2.