Excel Partners began fund raising for Excel Capital Partners III in November. The group, newly independent after its founding partners bought out Rothschild’s interest in the management company in early 1997, is targeting $100-120 million (ecu 90-108 million) for later-stage investments in Spanish and Portuguese companies.
The existing funds under Excel management, Excel Capital Partners I & II, originated as the Five Arrows Iberian Fund, which raised Pta 3 billion (ecu 18 million) in 1992. This Luxemburg SICAV was reorganised into two Guernsey-based partnerships last year.
Excel goes out to the market showing a gross IRR of 43% and a 29% pro forma net IRR to investors on the nine investments made from 1992 to 1995, five of which have been fully, and one partially, exited.To date, ECP I & II have returned over 180% of drawn down capital to investors. Deals led by Excel include the Pta 9.2 billion LHYSA-Autex buyout and expansion fundings for Unitronics, Duplico Group and Nuova Group.
Although Excel seeks to raise roughly five times as much this time round, the investment strategy for ECP III will closely resemble that of its predecessors. The fund will focus on “management-led” equity and equity-related investments in Spanish and Portuguese high-growth companies, particularly those aiming for geographic expansion, and will undertake buyouts, corporate restructurings and expansion capital investments. ECP III will particularly favour companies with potential for expansion into the rapidly growing Latin American markets. This strategy is designed to capitalise on the Latin American market experience and professional relationships of two of Excel’s senior partners, Jose Maria L-pez de Letona and David Bendel.
The original Excel fund was raised largely from Spanish institutions, together with a few international investors. The larger ECP III, however, will primarily target US institutions. Sponsor BT Alex Brown, which is also acting as placement agent for the fund, plans to commit $10 million to ECP III.
ExcelOs Tara Wright, responsible for investor relations, says that while the group anticipates that domestic investors will show sufficient interest to give the fund credibility in the wider international market place, in Spanish institutional appetites for private equity remain under-developed. ECP III will also be marketed to UK investors. Excel’s buyout from Rothschild arose as a result of internal reorganisation of the Rothschild group’s international private equity funds business.
ECP III will be structured as a Delaware LP, and may also incorporate either a mirror vehicle to allow Spanish investors to take advantage of rapidly changing domestic venture capital operating company legislation or a regular off-shore structure. Excel aims to hold a first closing during the first quarter of next year.
As well as senior partners Jose Maria Lopez de Letona, David Bendel , a former director of NM Rothschild in London, and Manuel Onate, the Excel Partners investment team includes Antonio Gutierrez Javier de Benito and Tara Wright.