Banexi Ventures II, which closed in July on FFr 400 million (ecu 60 million), is the first of a series of sponsored funds planned by BNP Private Equity (BNP PE), the newly formed dedicated portfolio management subsidiary of the Banexi Group.
The formation of BNP PE separated Banexi’s private equity and M&A functions. It also marked Banexi’s withdrawal from direct private equity investment. In the future, Banexi will only invest via sponsored funds, providing between 25% and 35% of their committed capital. These funds will be managed by separate management companies under the BNP PE holding company umbrella.
Each fund launched under BNP PE’s aegis will have its own management company.
Investment executives will step down from BNP PE to be hired by the individual management companies, which will have standard carried interest and co-investment terms. The managers will themselves contribute 1% of each BNP PE fund’s capital.
Managing director Dominique Peninon said that the new BNP PE structure, which will be run by separate management and supervisory boards, was modelled on “Anglo-Saxon” lines, better to meet the requirements of international investors.
“BNP Private Equity intends to establish a position as a strong international private equity fund management company”, affirmed Dominique Peninon. “Hitherto, Banexi has focused primarily on France but is now keenly aware of the need to become a truly European player”. One of the factors underlying Banexi’s broadening geographic perspective is the need to provide active support to portfolio companies as they internationalise. The group will seek to achieve this status by establishing alliances and joint ventures in other European markets. Banexi will eventually seek to sponsor funds for investment outside France, while its primarily domestic vehicles will dedicate a portion for investment in neighbouring countries where the group has local connections. BNP PE is also developing plans to operate in emerging markets, in cooperation with its ultimate parent BNP, Emerging Markets Group in London and Peregrine in Asia.
The success of the Banexi Ventures II vehicle augurs well for BNP PE’s future fund-raising ambitions. The fund’s initial target of FFr 300 million to FFr 350 million was revised in response to investor demand following the March launch, and the vehicle was capped at FFr 400 million in July. Banexi, as sponsor, provided 30% of the fund’s total, while non-French investors accounted for 28% of Banexi Ventures II. Excluding Banexi’s commitment, 45% of the capital raised was drawn from funds-of-funds, 16% from insurance companies, 13% from investment companies, and 11% from banks. Private individuals (8%) and pension funds (7%) provided the balance of the FCPR’s capital.
Banexi Ventures II, like the group’s first dedicated early-stage vehicle, will focus on innovative high-growth enterprises in the information technology, electronics/semiconductors and life sciences sectors, mainly in France but also in the rest of Europe. During the course of this year, Banexi made six direct investments in companies in the new fund’s target sectors; Banexi Ventures II acquired these holdings immediately following its closing.
BNP PE will launch two further fund-raising programmes in September. One offering – provisionally named Banexi Capital Developpement II – will be a later-stage fund. The other, the third Euromezzanine vehicle, will be co-sponsored with Financiere Natexis (EVCJ June/July 1998, page 6). Both vehicles will have targets of more than FFr 1 billion.