Private equity firm H.I.G. Capital has raised €1.6 billion for its latest European lower-midmarket fund, targeting buyouts and growth investments across industrial, manufacturing and technology sectors.

The fund, H.I.G. Europe Capital Partners Fund IV, will focus on companies with enterprise values typically below €500m, according to a statement.

H.I.G. said the strategy will concentrate on operationally complex businesses where it can drive performance improvements and add-on acquisitions, continuing its long-standing focus on industrial and services assets across Western Europe.

The fundraising comes as private equity groups increase exposure to European industrial companies that could benefit indirectly from rising defence and security spending, including suppliers of components, engineering services and dual-use technologies, even where funds are not explicitly defence-focused.

H.I.G. manages more than €68 billion in assets globally and has completed multiple investments across aerospace, manufacturing and government-linked services in Europe in recent years.