Venture Capital – Granville Baird unveils first dedicated IT fund for Spain

Granville Baird Capital Partners, the private equity division of Granville Baird, in March announced the formation of TEC PLUS III, the first Spanish venture fund dedicated exclusively to IT and telecoms – as opposed to Internet’ – investments. Other Spanish venture houses active in TEC PLUS III’s target sectors have invested through generalist vehicles.

Three partners – SAFEI, Iberdrola and the European Investment Fund – had joined Granville Baird by the TEC PLUS fund’s first close at Ptas5 billion ( e30 million), well along the way to its final target of Ptas6 billion.

SAFEI, which is one of Spains leading independent stockbrokers and pension fund managers, owns 25 per cent of Barcelona-based Granville Private Equity Spain, the fund manager for TEC PLUS III. A number of SAFEI clients are also participating in the fund, committing Ptas2 billion. Iberdrola, which with some 13 million customers in Spain and Latin America and assets of approaching a18 billion is one of Europe’s leading electricity companies, has committed Ptas1.5 billion to the fund as part of its diversification strategy. Tec Plus III attracted Ptas1.25 billion from the European Investment Fund, in line with the EIF’s remit to support investment in entrepreneurial and high growth sectors.

Jaume Berge, managing director of Granville Private Equity Spain, comments that the support Tec Plus III has attracted from such blue-chip investors “reflects the scale of the opportunity in the Spanish market.”

The management team, headed by Berge and Jordi Vilanova, one of Spain’s foremost IT business experts and a former vice president of the national IT and electronics trade association, had reviewed more than 40 investment opportunities prior to the first closing. By press time, less than a month later, the fund had already completed three deals for a total of Ptas1 billion. TEC PLUS III’s portfolio currently comprises holdings in Telenium, an interactive IT services company; software developer Synera; and multimedia and web design specialist Software de Medicina (Softmed) (see page 52).

These deals typify the fund’s investment strategy, which is to target IT or telecoms companies that have already developed viable products but have insufficient cash flow to fund the marketing and rapid expansion necessary to gain share in a competitive market place. According to Jaume Berge, the e-services, CRM, Internet and IT services sectors are generating promising opportunities at present. Guillermo Barredo of Iberdrola Diversificacin, the utility’s technology investment arm, discussed Iberdrola’s reasons for committing to the fund: “Investing through a private equity institution with a technology specialisation was the right way for us to enter the market. While the amount invested is relatively modest for Iberdrola, it gives us exposure to a sector that has already shown excellent returns for investors”.

Tec Plus III is Granville Baird’s first dedicated technology venture fund as well as Spain’s. Michael Proudlock, head of Granville Baird’s private equity busiesses in Europe, describes the fund as a highly complementary addition to [Granville Baird’s] mid-market proposition’. He adds: “The fact that we’ve chosen a Spanish fund as our first early-stage investment vehicle is a reflection of our European commitment. It represents our first small venture – others may follow elsewhere”.

Granville Baird Capital PArtners in Januaary closed GPEM VI, its sixth fund, on target at more than

GBP200 million. The fund comprises parallel vehicles, one dedicated to the German market, and the other focusing primarily on the UK but with a remit including other continental opportunities.