Largest Portuguese PE fund raises €50m

Explorer Investments has held an initial close on €50m of its debut Explorer I fund, aimed at helping Portuguese companies invest in Spain.

Explorer Investments, a Lisbon-based private equity firm, has held an initial close on €50 million ($60 million) of its first fund, Explorer I fund, surpassing its interim target of €40 million. The fund has a final target of €75 million and aims to hold a final close by November this year.

The fund, whose aim is to help Portuguese companies expand into neighbouring Spain, is already twice as large as any previous private equity fund raised in Portugal.

Portugal is one of Europe’s least developed private equity markets, where funds represent only 0.09 percent of gross domestic product, compared with a European high of 0.65 percent in the UK and a European average of 0.25 percent.

According to Rodrigo Guimaraes, one of Explorer’s four founder partners, that situation is changing. “Portuguese companies are beginning to open up to the idea of private equity,” he said.

Explorer Investments was set up last year with the focus of helping Portuguese companies expand in Portugal and also undertake cross border transactions in Spain to create larger Iberian companies.

The firm has teamed up with Mercapital, the Spanish private equity group, in an exclusive agreement to make joint investments in Portuguese companies operating in Spain.

Guimaraes said that the theme of pan-Iberian integration was well-established and although private equity as an asset class was not widely developed in Portugal, interest from investors had been high: “Investors were very interested in the idea and were enthused by the concept of a Portuguese team doing Iberian deals” he told PrivateEquityOnline.

No investments have been made from the fund to date, but the focus will be on investing in Portuguese industrial and service companies in Spain or Portugal valued at €25 to 50 million and the fund will invest not less than €3 million per transaction.

The majority of LPs that have committed to the fund have been Spanish institutions. Caja Nova, a Spanish savings bank, has taken a 20 percent stake in the management company and seven other regional Spanish banks have also made investments. API, the Portuguese state investment agency has also taken what Guimaraes described as a “symbolic” stake in the fund.