Alcedo races to close on Fund IV

The Italian lower mid-market firm expects to close its latest vehicle on about €195 million.

Italian lower mid-market firm Alcedo is wrapping up final commitments to its fourth vehicle, making it the latest southern European fund to have reached a successful close this quarter.

Alcedo IV is expected to close at the end of the month on €195 million, above its €175 million target and slightly larger than the firm’s previous 2008-vintage vehicle that raised €173 million, Alcedo partner Michele Gallo told Private Equity International.

The new fund has drawn 60 percent of its commitments from existing investors and 40 percent from new investors from both Italy and overseas. Investors in Alcedo III include the European Investment Fund, Fondazione Casse di Risparmio di Padova e Rovigo and Veneto Banca, according to PEI Research & Analytics.

The firm started pre-marketing for Fund IV last year and launched in September. It held a first close in January and announced its first investment in mid-February, the €11 million acquisition of a majority stake Italian construction company Exa Group, which fits out luxury retail stores.

Gallo said the speed of the fundraising was due to the team’s track record and the performance of Alcedo III. The fund has invested in 10 companies of which it has divested five completely and partially exited wine producer Masi Agricole through an initial public offering in June last year.

Those divestments have generated a net multiple for the fund of 2.15x and a net internal rate of return of 22 percent. The firm is working on another two exits, Gallo said.

“Fund III is a good way to discuss re-ups or new investments,” Gallo said, adding that “our team has almost a 20-year history of growth investments in Italy. We are well-known in Northern Italy.”

Alcedo IV will follow the same strategy as its predecessor seeking investments in well-established Italian SMEs with strong growth potential and international expansion ambitions, investing slightly larger equity tickets than Fund III of €12-15 million. It plans to make two investments per year.

“Coming out of recession the industrial tissue of Italy is composed of much stronger companies,” said Alcedo senior advisor Marco Di Miceli, who joined the firm in 2014 to help with the fundraising.

When asked about the eight-year gap between fundraising for its third and fourth vehicles, Gallo noted that the firm was “in no specific hurry”. It was also waiting for the Alternative Investment Fund Managers Directive to be implemented in Italy, which was expected in 2013 and came into force last year.

Alcedo’s fundraising follows 21 Investimenti, the Italian branch of 21 Partners, which closed its third fund on its €343 million hard-cap this month, exceeding its €300 million target, as reported by PEI. The fund, which held its first close a year earlier on €220 million, was larger than its predecessor, a 2008-vintage vehicle that closed on €280 million.

Milan-based buyout firm Investindustrial, which focuses on southern Europe, closed its sixth fund on its €2 billion hard-cap also in February after just three months in market, as reported by PEI.

Other Italian funds collecting capital include Charme Capital Partners, which is also based in Milan and is in market targeting €500 million for its third pan-European vehicle. In February it announced it had fully divested Charme II, a 2009-vintage vehicle that raised €340 million, through the sale of blood purification company Bellco, as reported by PEI.