Exclusive: Mid Europa to seal €600m first close

The firm will be holding an official first close in January, as it works towards its €850m target for Fund IV.  

Mid Europa Partners is nearing a first close of between €600 million and €700 million for its fourth buyout fund, according to a source familiar with the matter.

The firm, which came to market in February, started a rolling first close at the end of September with commitments of approximately €200 million, which have gradually increased since then. It will hold the official first close in January, the source said.

A rolling close allows LPs to process their commitments at their own speed, without all having to be ready on the same day, according to the source. It is understood Mid Europa has opted for this model because a few LPs are keen to take advantage of certain incentives on offer for investors in the first close – including co-investment priorities and an early bird discount – but need a bit more time to process their commitments.

Mid Europa declined to comment on fundraising.

Mid Europa originally targeted €1 billion for its latest fund, but agreed with LPs to cap the fund at €850 million. The nature of deal flow in Central and Eastern Europe has changed, with deal sizes dropping, according to the source. “[The market currently offers] more buy-and-build opportunities which are in the €75 million to €100 million ticket range, whereas before [the economic crisis] it used to be around €150 million,” a source told PEI in July.

The smaller fund also allows Mid Europa to offer a large proportion of co-investments. It is understood the firm wanted to continue to offer 40 percent to 50 percent of each fund in co-investments and therefore decided to cap the fund. In theory, with the GP commitment and co-investments combined, the firm would have between €1.2 billion and €1.5 billion available to invest – a similar amount to Mid Europa’s €1.53 billion predecessor fund, a 2007-vintage.

It is understood most of the investors in the first close are existing LPs, including the European Bank for Reconstruction and Development (EBRD), which will commit up to €80 million.

Mid Europa has had a relatively busy year. It exited Serbian TV provider SBB/Telemach netting a 3x return and sold Lux Med, a provider of healthcare services in Poland, to UK’s Bupa, generating a 2.5x return. Mid Europa also bought a 75 percent stake in Polish ski lift operator Jaworzyna Krynicka.