IDeA Capital Funds, a Milan-headquartered firm, has reached its €100 million target for its IDeA Energy Efficiency And Sustainable Development Fund.
The fund, which held a €50 million first close in July 2011, will make eight to 10 investments in small to mid-sized companies with an enterprise value between €5 million and €20 million. Approximately 70 percent of the fund will be invested in Italy and 30 percent will be deployed in Germany, Israel and Switzerland where IDeA will co-invest with local partners, Federico Cellina, the firm’s head of market and institutional sales, told Private Equity International.
The fund, which will do both minority and majority investments, has already made two investments with a third one coming up shortly, Cellina said.
The final close comes as IDeA, traditionally known as an Italian fund of funds manager, is planning to expand its direct investment strategy. “We have a fairly rich pipeline of direct funds in the coming years. These direct funds will have a specific theme, in which they will invest, areas where Italy is internationally recognised. At the same time we will continue to diversify on fund of funds as well,” he said.
This has been the toughest year of fundraising we have had ever experienced. It is a very time-intense process, as most LPs nowadays want tailor-made solutions before committing to the fund
As well as planning to launch additional direct funds, the firm is about to launch its third fund of funds, IDeA Capital Fund III (ICF III), which will have a €200 million to €250 million target, Cellina said. In 2009, IDeA raised €281 million for its ICF II and in 2007, it raised €680 million for its ICF I.
Fundraising for IDeA’s Energy Efficiency And Sustainable Development Fund was challenging, Cellina admitted. “This has been the toughest year of fundraising we have had ever experienced. It is a very time-intense process, as most LPs nowadays want tailor-made solutions before committing to the fund,” he said.
Approximately 75 percent of the LPs were existing investors, and 25 percent were new, he added. “We have a total of 15 investors, besides our sponsor Dea Capital, which include three insurance companies, two banks, two pension funds, one listed company and the remaining LPs were wealthy entrepreneurs or family offices,” he said. “The majority of LPs were domestic, but we have also received interest from international LPs for a possible follow-on energy fund.”
Many investors remain uncertain about the Italian buyout market due to the country’s ongoing economic and political woes. Last month, both Advent International and Apax Partners said they would close their offices in Milan.
“Italy has its own up and downs,” Cellina admitted. “For international investors it can be tough to invest in Italy because they find it much harder to assess the political situation than local players.”
However, there are always good opportunities in Italy, he insisted. “Despite the economic slowdown, it’s actually a very good moment to invest in Italian companies because entry prices could be fairly attractive. There are a lot of opportunities out there, not only in the energy efficiency sector, but in general. As banks are constrained in their lending, there are some Italian businesses that are now turning to private equity for financing,” he said.