Former PAI chiefs launch rival firm

The two former heads of European buyout firm PAI Partners, Dominique Mégret (pictured) and Bertrand Meunier, have begun preparations for a debut fundraising at their new firm.

Dominique Mégret and Bertrand Meunier, former chief executive and senior partner respectively at Paris-headquartered buyout firm PAI Partners until they were ousted in what some investors regarded as a ‘coup’ in 2009, have resurfaced with their own venture.

Mégret and Meunier have launched a buyout firm called M&M Capital, and have moved into new offices in Paris.

Mégret is the start-up’s chairman, while Meunier holds the role of managing partner.

The pair won approval for their venture from the French regulator, L’Autorité des Marchés Financiers (AMF), late last year, and have been in informal discussions with investors since then, according to a source close to the firm.

That process is set to take a more formal turn however. Placement agent MVision Private Equity Advisers is understood to have been mandated to work on the fundraising, but declined to comment.

The pair will target between €1 billion and €1.25 billion in commitments for their maiden fund, according to a source close to the firm, although the fund is still in its early, pre-marketing stages; no private placement memorandum has yet been sent to investors. One source close to the firm said: “They are ready to push the button.”

The fund’s likely size will be significantly smaller than PAI’s last effort, PAI Europe V – which was halved from €5.4 billion to €2.7 billion in 2009 to placate investors alarmed at the departure of Mégret and Meunier. Their departure triggered a key-man clause in the fund’s documentation, calling a halt for several months to further investment activity. 

However, the M&M Capital founders have strong relationships with PAI’s investor group, which could see them approaching such LPs in the hope of winning commitments to their debut fund, a source said.

M&M Capital will focus predominantly on the French market, but may make investments elsewhere in Europe, a source with knowledge of the firm said. It will adopt a “back-to-basics” approach, similar to that which saw the pair make their names at PAI, the source added.

PAI Partners, meanwhile, is unlikely to return to market with a new fund until next year, according to a source close to the firm. The firm plans to make three further investments using capital from PAI Europe V, bringing the total portfolio to ten companies, before launching a new fundraising effort. It has already returned more than €3 billion to investors over the last year, realising investments that were made during Mégret and Meunier's tenure at the firm. It is unclear whether they will share in the carried interest paid out as a result of those realisations, however.