Agribusiness specialist raises €700m – Exclusive

Paris-headquartered Céréa Partenaire has raised almost €700 million to invest in Western European agribusiness through its buyout, mezzanine, and senior debt arms.

The firm has held simultaneous final closes on its latest buyout fund – Céréa Capital II – and mezzanine fund – Céréa Mezzanine III – raising €225 million and €200 million respectively. This follows the final close of its debut senior debt vehicle, Céréa Dette I, on €268 million in April 2016.

Céréa Partenaire targets food and beverage businesses and all related companies that work for or with these businesses, including distribution, catering, equipment, packaging, logistics, and retail companies.

“It’s quite a significant market, and it’s also very resilient, because it’s based on food consumption,” Céréa Partenaire CEO Michel Chabanel told Private Equity International.

Céréa Partenaire’s LP base is made up primarily of institutional investors, including insurance companies, pension funds, funds of funds and banks. Many of the firm’s LPs invest across its product lines.

“It depends on the kind of investor,” Chabanel said. “Some only want to do debt, so they invest only in the private debt fund. There are some investors that invest in the three funds. Roughly two thirds of investors are invested in at least two funds.”

Céréa Partenaire is a subsidiary of Unigrains, an investment company established 50 years ago by French cereal producers to finance French agri-businesses. Unigrains provided 16 percent of the capital raised. The firm made a GP commitment to each of the funds which is “in line with the market in France”. Chabanel declined to disclose the specific amount of the GP commitment.

Céréa Capital II, which was initially targeting €200 million, is 70 percent larger than its predecessor, which closed on €130 million in 2008. The fund focuses on majority or co-majority stakes in primary and secondary buyouts, carve-outs and public-to-private transactions in Western European companies with a turnover of between €20 million and €250 million.

The fund has already made three investments, backing ready-to-bake chilled doughs business Cérélia, French processed cheese business La Comtoise, and Krampouz, which produces crepe-makers and cooking equipment. It is expecting to complete its fourth investment in the coming days.

Céréa Mezzanine III is around 60 percent larger than its predecessor, which closed on €127 million. The fund provides mezzanine financing for acquisitions and organic growth projects as well as leveraged transactions and shareholder restructuring, arranging financing between €2 million and €50 million.

The firm’s debt offering surpassed its target by more than 30 percent. This vehicle will provide senior loans, private placements and unitranche bonds for buyouts, growth investments, and business funding. Nearly two-thirds of the fund’s capital has been deployed through 16 investments.

The combination of sector focus and the ability to provide a full range of financing options helps to differentiate Céréa Partenaire in the market and gives the firm a competitive edge, Chabanel said. The firm can invest in the same business from different funds.

“If we see a company that is not yet ready to open its capital because the manager doesn’t want to be diluted, for example, we can provide mezzanine debt. If he or she looks to sell three or four years down the road, we will be well positioned with the buyout fund. It’s a commercial advantage when you go to see a company and say you can adapt to meet their needs. In some cases, we have won deals because we could offer both equity and financing.”

Exposure to a single sector through multiple strategies also gives Céréa Partenaire a broader network and knowledge base.

“When you invest in a sector with three different products, clearly we do quite a lot of transactions compared to a buyout fund, for example,” Chabanel said.

“We have made 80 transactions since inception. That means we see quite a lot of deals, we work with quite a lot of companies, and that clearly gives us better knowledge of the environment, of the agribusiness sector. It’s an advantage for us, to better understand, to better invest, and also to be more competitive.”