SPEF, the merchant banking subsidiary of Groupe Banque Populaires, which has a 30% share of the French SME banking market, has launched a pre-IPO fund to capitalise on the leading market position and on SPEF’s close connections with Easdaq and specialist investment bank Quartz Capital Partners.
The SPEF Pre-IPO European Fund held a first closing on ecu 23 million at the end of October. The fund, for investment in fast-growing European companies intending to list on markets such as Easdaq, the Euro NM or Nasdaq within 18 months, will be capped at ecu 30 million.
The fund’s natural candidates are fast growing companies, especially in the semi conductors, electronics and medical science sectors, and retail distributors, particularly in the software field. The SPEF Pre-IPO European Fund will normally take holdings of between 5% and 35% in investees. Gregoire Revenu of SPEF said that the percentage stake was a less important issue than whether or not SPEF could “bring something to the party” in terms of helping to list the company. He added that the vehicle will play a valuable role in raising a company’s profile among potential investors prior to a listing. Since SPEF specialises in private equity investment rather than the management of listed stocks, the fund intends to sell its holdings at the time of the IPO.
Gregoire Revenu of SPEF explained that it is often structurally beneficial for a flotation candidate to have a number of sellers among its shareholders at the time of an IPO. The fund has been specifically designed for investors who wish to acquire listed stocks in young growth companies, but do not have the in-house resource for the extensive due diligence this type of investment requires. Investors in the SPEF Pre-IPO European fund will benefit from SPEF’s sector expertise and have the right of first refusal on the stocks sold.
SPEF has FFr 2 billion (ecu 300 million) under management, approximately half of which comprises funds managed on a third-party basis for French institutions and international groups such as ING Parcom, Bank of Scotland and the European Investment Fund. It has to date focused mainly on buyout investments. Gregoire Revenue reported that over the past 12 years, SPEF has achieved a 30% net IRR on all its investment activities, with the figure for buyout investments being considerably higher.
The group has also been closely involved in European new markets projects, as a founder shareholder, one of the larger investors in Easdaq, and as partner in the specialist investment bank Quartz Capital Partners. It also has its own specialist investment banking subsidiary, SPEF Technology.