French small caps set for equity boost

French growth equity specialist NextStage has raised €61m at the first closing of its latest fund, Champion Small Cap II.

The firm is aiming to raise €120m, and has reached the halfway mark less than six months after launch.

The fund raising effort has been concentrated on the home market, and has received commitments from a number of institutional investors and family offices, including Groupe Artémis, the financial holding of Francois Pinault, CDC (Caisse des Depots et Consignations) and OFI Asset Management. European investors will now be approached as the fund seeks to achieve a final closing during the course of 2009.

The fund raising is led by placement agent Acanthus Advisers. Acanthus managing partner Armando D’Amico said: “In the current fundraising environment this is a minor miracle, or perhaps a sign of the renewed interest in growth equity given the demise of leveraged buy-outs.”

The investment strategy targets opportunities in the French lower mid-market, looking for controlling stakes in small caps with enterprise values between €5m and €30m.

D’Amico said: “There is a large and unexploited opportunity in France in this segment, now more than ever since the buy-out activity has all but dried up since the credit crisis.”

Founded in 2002, NextStage’s strategy is to back entrepreneurs to create

global niche market leaders, and comes during a flourish of growth funds. Last year both Kennet Partners and Index Ventures closed vehicles aimed at exploiting such opportunities.

It is also the second small cap French fund to close this year. In January Montefiore Investment closed a €120m fund.