Paris-based LBO France has launched White Knight IX, its latest buyout vehicle, with a target of €1 billion.
The fund is aiming higher than its predecessor, a 2008 vintage that reached its final close on €851 million. It also will attempt to garner more money than White Knight VI and VII, which closed respectively on €355 million and €644 million.
LBO France, which postponed fundraising plans in 2012, declined to comment on the launch.
A more ambitious fundraising effort was needed to target larger acquisitions and plug the post-crisis debt financing gap, a source close to the matters said. “There is less debt available than before the crisis, and in order to continue acquiring sizable assets firms have to sign bigger equity checks.”
The news, first reported in the Financial Times, comes after LBO France contemplated the idea of topping-up its previous vehicle, the source said. The firm thought of adding a fresh €350 million to White Knight VIII earlier this year, a move that would have required a number of existing LPs to sell part of their assets to new investors, allowing these to inject new cash. But a majority of investors proved unwilling to see their position diluted, the source said, and the idea of a top-up was later swapped for a tradition fundraise of a new vehicle.
“It will be a test of investor’s appetite for France,” the source said. The one-year-old government of president Francois Hollande is trying to rebuild trust with the business community, after threats of drastic tax increases rocked the local private equity industry last year.
The vehicle will target a more international base of LPs than its predecessor, which is made of 87 percent of European capital, including around 50 percent of funds coming from French investors. It is due to follow the same strategy as its predecessor, which has aimed to bring successful French businesses on to the international stage, the source said.
White Knight VIII’s current portfolio include The Kooples, a fashion retailer now present in the UK, Germany and Spain, as well as dessert maker Materne, which made its first foray in the US over the last couple of years.
The fund has yet to make its first exit. But a number of prominent disposals are imminent, the source said. LBO France is looking to organise a second round of bidding for furniture maker Maison du Monde this summer, paving the way for a transaction that is expected to value the company in excess of €650 million.
It is also seeking to sell hospital operator Medi-Partenaires, and actively looking to acquire perfume retailer Nocibe, according to the source. Unless the new fund reaches an interim close on time, equity for the deal would likely come from ad-hoc fundraising or co-investment vehicles, it said.
Founded in 1985, LBO France has around €4.10 billion under management. White Knight VIII, which is targeting a 2.2x return on investment and 20 percent IRR, is currently valued at 1.4x, according to the source.