The private equity arm of Paris-based asset manager Edmond de Rothschild (EDR) plans to launch a fund focused on the Andina countries in South America as part of its plan to increase its exposure to private equity.
EDR has total assets under management of €149.6 billion of which more than €3 billion are allocated to private equity through 10 different strategies.
The firm, which is focused on responsible investing, will mimic its strategy for Africa in South America, EDR private equity chief executive Johnny Hachem told Private Equity International.
“We have a very strong interest in the Andina region. We will start marketing soon. We have already identified a partner and an agreement and are finalising due diligence,” Hachem said.
The Andina region includes Bolivia, Columbia, Ecuador and Peru. Hachem added that Cuba could also provide interesting opportunities as the economy opens up.
Speaking generally, Hachem said that the firm offers diversified strategies in terms geography and sectors, “and our strength lies with our partnerships and team that can secure proprietary investments. Sourcing is key to our strategy”.
The firm is currently raising a fund focused on China and held its first close in June on €50 million. The fund is targeting €100 million, which it is aiming to raise in the next six to nine months, Hachem said, acknowledging that the firm was lucky it reached its first close before the current market volatility.
“We are suffering a bit, but we are confident things will calm down,” Hachem said, noting that the firm had long-term investors.
That fund will invest in small and medium-sized companies in growing sectors with an emphasis on forming partnerships with French companies.
The firm will start marketing its third Edmond de Rothschild Europportunities (ERES) fund “imminently”, Hachem said.
The growth capital vehicle focused on robust European companies is targeting €250 million-€300 million and will be bigger than the previous two funds in the ERES series combined.
“We are confident about the number of re-ups,” Hachem added.
Across the board, its existing limited partners include pension funds, institutions and asset managers, as well as a large number of development finance institutions and parastatal entities. “A lot of our strategy is in emerging and niche markets,” Hachem said.
Non-institutional investors include wealthy families with an industrial background that can bring synergies to investee companies, he added.
The firm’s investors include US, European, Chinese and North African investors. Its second ERES fund has a bias toward French institutions and the firm is seeking to broaden its investor base for its new vehicle.
Its previous fund, ERES II, was fully deployed by August undertaking more investments than planned, and has returned 60 percent of commitments to investors, Hachem said. “There’s no overlap between that fund’s deployment and the new.”
“The vast majority” of EDR funds present co-investment opportunities on a fund basis, first to its limited partners and then to third parties, Hachem added. He gave the example of an ERES and Africa fund investment in a bank in Ghana that included co-investors.
The firm plans to increase its allocation to private equity by 50 percent by the end of 2018.
It is also planning further fundraisings in 2016: in Africa, through its Amethis series; for TIIC, a pan-European infrastructure vehicle; for the small-cap series Cabestan; for BioDiscovery that invests in life sciences; and Ginko, its land remediation fund franchise.
As part of its expansion it has appointed David Chamberlain as head of investor relations for private equity. The ERES series is headed by Jean-Francois Felix, who joined the firm as associate director in June, it said.