SES Iberian Fund I, a cross-border Iberian-French private equity fund, is being launched by Espirito Santo Capital, the private equity arm of Banco Espirito Santo Group, and Sigefi Private Equity, the management company of Siparex Group. The fund will target mid-market companies in Spain, Portugal and France.
Espirito Santo Capital and Sigefi Private Equity hope to raise around €50m from Spanish, Portuguese, French and international investors.
The fund will invest mainly in Spanish companies (50%) but will also target opportunities in Portugal and France. It will be generalist in nature and will invest in companies with sales of €10m to €100m. Siparex launched its Italian initiative a year ago called Siparex Italia, which had a target of €40m.
The new fund will benefit from the support of a Spanish advisory company – SES Iberia Private Equity SA located in Madrid and owned equally by the two partners. The company will be advised by a board of entrepreneurs including well-known and experienced Spanish, Portuguese and French managers representing the business sectors and geographical areas in which the fund is to operate.
The Spanish team is led by Oscar Martínez-Cubells, board member of SES Iberia Private Equity. The Portuguese and French investments will include professionals from Espirito Santo Capital and Sigefi Private Equity.
Spanish fund raising on the buyout side is slowly starting to pick up again following the boom in 2001 when €960.2m was raised for buyout funds in the region, according to figures from Venture Economics. This amount fell to €80m in 2002 and then jumped to 158.7m in 2003. The total of new funds raised in Spain in 2003, including capital gains totaled €879m, according to the European Private Equity and Venture Capital Association. This was a 45% increase compared to 2002 when €607m was raised. This figure reaches €1bn if resources allocated by local offices representing pan-European funds are taken into account. Banks continue to be the primary source of funds raised in 2003 contributing €393m and accounting for 45% of all funds raised compared to €290m or 48% of the total in 2002. Corporate investors committed €155m or 18% of the total. Central and regional government agencies provided 16% of funds raised in 2003 at €140m, followed by fund-of-funds which invested €79m and insurance companies which invested €33m.
Funds provided by domestic investors accounted for 75% of the total in 2003 while 20% came from other European countries and the remainder from investors outside Europe.
New regulation is expected to boost Spanish fund raising, in particular from Spanish pension funds. From February this year Spanish pension funds have been able to invest in unquoted entities, such as private equity vehicles. Spanish pension funds may now invest up to 30% of their assets in free transferable securities issued by audited private equity entities, provided that the investment does not imply a direct or indirect control over the investor entity and there are no economic links with the investor entity’s shareholders or directors.