Paris-based private equity house Activa Capital has secured limited partner commitments totalling E90m for the first close of its fund targeting mid-market opportunities in France.
Activa Capital Fund FCPR has attracted investment from a range of European investors, including French retirement fund AG2R, the Finnish Local Government Pensions Institution, funds managed by Partners Group, Proventure and Scottish Widows. Hermes Investment Management has provided a 25 per cent cornerstone commitment to the fund, which is hoping to close on E150m later this year.
The fund will look to invest in “growth buyouts”, smaller mid-market corporate spin-offs with a value of between E15m and E75m, a sector which Activa partner Michael Diehl believes is set for major activity in the coming year. “Last year saw many of France’s largest companies dispose of their larger divisions due to shareholder pressure. They are likely to tackle the smaller end of the market this year. Growth buyouts are attractive because IRR is created through growing the business, not by leveraging the deal.”
The firm is in the process of closing its first deal, the acquisition of Mont Blanc, a dessert business owned by Nestlé, which will retain a minority stake in the business. Mont Blanc, which posts annual sales of around E50m is a ‘classic deal’ for the fund, according to Diehl. Nestlé will retain a minority stake alongside Activa Capital. Activa is also expecting to announce a second, similar deal in the next few weeks.
Activa Capital is led by the firm's four partners. Michael Diehl, formerly director of French equities with UBS Warburg; Charles Diehl co-founded and jointly managed Barclays Private Equity France; Jean-Louis de Bernardy is the former president of the supervisory board of NatWest Equity Partners France, now Bridgepoint Capital France until July 2001; and Philippe Latorre is a former director of Paribas Affaires Industrielles.
“The success of the first close shows faith in the team we have built at Activa and highlights the fact that France is high on the investment radar,” said Michael Diehl. France is being tipped to rival the UK in terms of deal activity this year as the country’s largest companies continue to restructure, with one European practitioner putting France’s share of European dealflow in 2003 as high as 30 per cent.