Exclusive: Xenon nears €175m hard-cap

Xenon Private Equity, an Italian-based firm, is nearing a final close on its latest fund, according to sources familiar with the matter.

The fund, which had a €150 million target and a €175 million hard-cap, only came to market towards the end of last year.

Campbell Lutyens is helping Xenon to raise the fund. Both Xenon and Campbell Lutyens declined to comment.

Xenon’s Fund VI will be a similar size to the firm’s previous fund, Xenon V, a €150 million 2009-vintage. LPs in that fund include Akina, Berenberg Private Capital, Capvent, Indiana Public Retirement System, Massachusetts Pension Reserves Investment Management Board and RWB Private Capital Fonds, according to Private Equity International’s Research and Analytics division.

Xenon invests in the lower mid-market in Italy. It acquires controlling stakes or qualified minorities through equity investments of up to €20 million. The firm can however invest up to €40 million of equity through a co-investment arrangement with its LPs, according to the firm’s website. Xenon typically targets deals between €15 million and €60 million.

The news of Xenon’s rapid fundraise comes after Consilium, another Italian firm, held a €95 million first close last week. Consilium, which came to market last year, is targeting €150 million for its third
fund, which has a €200 million hard-cap.

Although sentiment towards Italy has understandably been quite negative in the last few years, things have changed in recent months, a source told PEI in November. “Investors are coming back [to Italy]. Quite a few underperforming teams are having trouble raising so they have either stopped or are raising less, [which means] competition is not that high. The case for Italy is very interesting. It’s a large country, with millions of small and medium sized companies – and if you operate at that end of the market, the opportunities are limitless.”

Consilium, a spin out from Kairos Partners, was established in 2006. Its first vehicle, the €45 million Kairos Partners Private Equity Fund, is understood to have delivered a 4.4x cash on cash return.

Consilium’s second fund, a €150 million, 2007-vintage has made eight investments, of which four have been exited. It is understood that fund is currently valued at 1.3x, although this is expected to increase, a source told PEI in November. The distributions to paid in (DPI) was 70 percent, the source said at the time.