French mezzanine specialist Euromezzanine is well on track with its fourth fund, Euromezzanine 4. Since its launch last May the fund has raised over EURO300 million and a final close on a target of EURO400 million is scheduled for the beginning of 2003.
The fund’s two sponsors BNP Paribas and Natexis Banques Populaires are also both investors in Euromezzanine’s third fund, which is now fully invested in 20 companies. Managing director Louis Vaillant said: “The first closing was relatively smooth, but this first closing is with existing investors. We have a few new investors and the fund has been well received primarily because many investors have been disappointed by the performance of certain LBO funds and so mezzanine is a new area and an asset class that they are willing to try.”
The fund will have a similar focus to the previous fund underwriting mezzanine tranches of EURO5 million to EURO80 million in companies with an enterprise value of between EURO50 million and EURO500 million. Typical transactions will include LBO, internal and external growth, replacement capital, bridge financing and turnaround.
Vaillant says: “With a fund of this size we will very cautiously be looking outside France to the rest of continental Europe, but our core activity is in the domestic French market.” Any investments outside of France will be made in Germany, Spain and Italy, but those three markets he adds are very small markets for mezzanine, so most of the investments will be done in France.
He remains realistic about fund raising: “We expect to close before year-end and have a final closing in the first quarter of 2003, but everything depends on the global markets. If there is a war in Iraq everything will come to a halt.”
Since its inception in 1990, Euromezzanine has completed over 80 mezzanine investments in excess of EURO300 million, 54 of which have been realised.