Germany’s Bayerische Landesbank, CDC Group of France and Italy’s SanPaolo IMI have each contributed E50m to the EA Partners fund, a new buyout vehicle that will invest in the European mid-market.
A statement said the fund is set to raise at least E250m for its first closing, ahead of a final closing that will be capped at E500m. The remaining E350m not committed by the founders is being raised ‘mainly from institutional investors’. The fund will have a term of seven years (four years for investment and three years for divestment), with an option to be extended for a further two years.
The fund will invest in management buyouts, leveraged buyouts, replacement capital and growth capital and will be managed by private equity units owned by the three banks: BLB Equity Management, CDC Ixis Private Equity Services Industries and SanPaolo IMI Private Equity. The three private equity arms have been working together since 2000 when cross-investments in their respective funds led to deal flow sharing and the exploration of co-investment opportunities.
“All three partners thought it was time to create a new structure as European unification develops and increasingly becomes a demanding challenge for mid-sized enterprises all over Western Europe,” said Klaus-Michel Hoeltershinken, managing director of BLB Equity Management. “So it seemed logical to set up a private equity structure which can supply pan-European partnerships between mid-sized enterprises with equity, or even originate pan-European build-ups.”
BLB Equity previously managed the Bayerische Landesbank-owned Bayerische Kapitalbeteiligungsgesellschaft fund, which was fully divested in 2000. BLB then set up and managed the S-UBG Bayern fund on behalf of Bavarian Savings Bank in mid-2002.
CDC Ixis Private Equity Services Industries manages two expansion capital funds – CDC Services Industries and ElectroPar France – while SanPaolo IMI Private equity manages a range of funds on behalf of its parent bank.
EA Partners appears to buck the recent trend of European banks moving away from private equity as an asset class, the most recent example being the expected buyout of Baring Private Equity Partners from ING. “I am not sure if this project generally implies new confidence from banks in private equity but at least it is an encouraging signal that three major European financial institutions have decided to act as sponsors,” said Hoeltershinken.