Following a year of consolidation in 1997 after the merger of its parent banks, Financiere Natexis, the private equity arm of Groupe Natexis, plans to raise new venture and mezzanine vehicles during this year.
The first, Natexis Ventech, aims to raise FFr 250 million to FFr 300 million (ecu 38 million-ecu 45 million) for investment in early-stage high-tech firms.
Previously, Financiere Natexis’s involvement in venture capital was mainly through Sofinnova, in which the group held a 37% stake, and Sofineti. Last year, Sofinnova Partners went independent, while Sofineti is now in the realisation phase.
Alain Caffi, general manager of Sofineti, will now head the management team for Natexis Ventech. The fund will concentrate on early-stage companies in the information technology sector, which will absorb as much as 70% of its capital, and in the life sciences field, although technology-based firms in other sectors will not be excluded. Alain Caffi said Natexis Ventech would favour start-up companies “with a few clients already on board” and seed-stage ventures.
Financiere Natexis plans to invest around 70% of Natexis Ventech in domestic opportunities. Outside France, the fund will favour markets where Financiere Natexis has local links, including Germany, the US and Israel. Natexis Ventech will normally invest as either the leader or a member of a two-to-three strong syndicate. The fund will not take stand-alone majority stakes, but Alain Caffi anticipates that in many cases its investment will form part of an institutional majority holding.
Financiere Natexis will commit 35% of Natexis Ventech’s total and plans to raise the balance externally from investors in France, the rest of Europe and possibly Asia, according to Herve Shricke, head of the private equity group, who added that Financiere Natexis would prefer “a small number of larger investors” for Natexis Ventech. Marketing for the fund, which will be structured as a standard ten-year-life FCPR, will begin in mid-June, and Natexis Ventech is scheduled to close by the end of the year.
Financiere Natexis, together with Banexi, also plan to market a third joint venture Euromezzanine fund. With a target of 150 million euros, the projected vehicle should far exceed its 1991 and 1995 predecessors, which total ecu 90 million. Herve Shricke explained the decision to seek a much larger vehicle: “The mezzanine market has changed drastically. With the last fund we were confined to the smaller end of the market. We now want to be in a position to underwrite larger amounts”.
Groupe Natexis and Banexi each plan to commit 20% of the third Euromezzanine fund. The balance will be raised from an international, largely European, investor group. Herve Shricke commented that the third fund would in effect be the first of the Euromezzzanine vehicles to undertake genuinely “open” fund raising.
In addition to France, the fund’s investment remit will cover the main Continental private equity markets, with a particular emphasis on Germany. Financiere Natexis and Banexi aim to access a broad spectrum of deals via the new vehicle, which will provide mezzanine fundings from around 5 million euros to as much as 30 million euros.
Louis Vaillant heads the Euromezzanine management team.
Last year, Financiere Natexis realised capital gains of FFr 500 million and posted unrealised capital gains of more than FFr 900 million. The private equity business contributed FFr 397 million to Natexis’s net banking income.
Earlier this year, the Banques Populaires made a cash tender offer for Natexis.
On completion of the deal, the expanded group expects to consolidate its position in the European private equity market by further broadening its product range and strengthening domestic and international synergies.