German turnaround fund ramps up for Fund II

German turnaround fund BluO International Affiliates is preparing to market its second vehicle – targeting more than €500 million – just eight months after closing its debut fund.

In October last year the firm closed its first fund on around €200 million – raised predominantly from family offices – with a further €100 million committed as co-investment capital.

This was initially intended as a first close on the way to raising a €600 million vehicle. However, following discussions with investors, BluO closed the fund to new investors. This was because after five investments had been made at reduced entry prices, participants in the first close were not happy diluting their shareholding by allowing further investors into the partnership, Peter Löw, co-founder of the firm, told PEO, in a telephone interview.

Pit-Stop: In need of some work

Acquisitions from BluO’s first fund include the German auto repair and retail chain Pit-Stop, which was carved out of PAI Partners-owned group Kwik-Fit in a deal completed earlier this month, and German clothing retailer Adler.

BluO makes unleveraged acquisitions and will typically exit its investments within 12 to 24 months of acquisition. Fund I has drawn down €30 million, with €170 million of dry powder remaining, and is in advanced talks with four more businesses in Germany and Switzerland, said Löw.

The firm is now selecting from a shortlist of placement agents to market its second vehicle, to be launched next year. Munich-based agent Viscardi acted as placement agents for Fund I.

BluO was founded by Peter Löw, Martin Vorderwülbecke and Markus Zöllner: all formerly of German restructuring fund Arques Industries.