Rothschild closes debut French

Edmond de Rothschild Capital Partners plans to invest its €210m debut fund in 10 to 12 transactions over the next three and a half years. “We plan to invest two or three times a year and have already made our first two investments,” said managing partner Eric de Montgolfier. “We’ll be recruiting a further three professionals to roll out the second stage of the business.”

The Edmond de Rothschild LBO fund closed at €210m, exceeding its original €200m target 15 months after its first close in July 2003. The fund is positioned in the less competitive and less auction-driven French lower middle-market segment, targeting companies with enterprise values between €20m and €150m. Investments will range between €10m and €40m. “This is the least competitive part of the market. The upper middle market is very crowded and almost 100% auction-driven,” Montgolfier said.

Strategy is focused strictly on growth scenarios, like buy-and-build, which favour operational and strategic value creation versus financial leverage value creation. The fund will mostly take majority positions, alongside management. It has already invested in the owner buy-out of Bonpoint, the leading French luxury childrenswear brand, and the management buy-out of Via Location, the number two independent player in the French truck rental industry.

Over 30 investors joined the fund, including French, European and US sources. One third of the investments came from outside France. Danske Private Equity, Adveq, Kredietbank Luxembourg and Mederic are among the investors.

The investor base is also diversified between financial institutions, funds of funds, pension funds, family offices and wealthy individuals and corporates. The split sees financial institutions taking up 36% of the fund, funds of funds accounting for 26% of investments and pension funds contributing 26%. Family offices and wealthy individuals invested 9% of the total funds, while corporate contributed the remaining 5%. Edmond de Rothschild provided a cornerstone investment of €30m at first close. De Montgolfier manages the fund alongside managing partner Erick Fouque.

SJ Berwin Paris acted as legal counsel and advisor to Edmond de Rothschild Capital Partners. Placement agent Altium Capital assisted on the non French fund raising.

The French buyouts market has been a driver of European activity in the last few years. So far this year it has yielded 45 deals worth US$2.42bn. This compares with 51 deals worth US$3.52bn during all of 2003. However, the high point for the market was 2002, when a series of jumbo transactions inflated value to E13.5bn from just 53 deals.