Fund record for the Continent

PAI Partners closed its latest fund at €2.7bn (US$3.5bn), claiming it as the largest private equity fund to date in Continental Europe.

Market sources dubbed the fundraising a good result that was placed into strong demand from domestic French investors. But they added that PAI could expect more competition in future from country-focused French funds and urged the firm to further increase investment outside its home market.

PAI Europe IV closed three years after its predecessor with an oversubscription in a rapid orchestration. The PPM was distributed last October and the initial target was set at €2bn.

“Over 80 investors participated in the fund. We prioritised existing investors as well as new investors with a long-term view towards the firm,” said Dominique Megret, deputy head of PAI.

Investors include public and corporate pension funds, government agencies, financial institutions, foundations, family offices and high net worth individuals. Some 55% of the investment stems from Europe, 32% from North America and 13% from Asia and the Middle East.

PAI said it would invest the new fund based on a continuation of its current strategy. It invests as a controlling shareholder in European buyouts of medium to large sized businesses with transaction values typically in excess of €500m.

The firm also intends to remain selective in its application of leverage. “I’m not against high leverage if the company concerned can still generate sufficient free cashflow in order to meet growth targets. The multiple also has to be justified by an industrial valuation, as opposed to a purely financial valuation,” Megret said.

Currently, 61% of PAI’s investment stems from France. The firm is aiming for France to account for 50% of investment in the new fund.