LBO France to target small LBOs

The French private equity firm has already secured half the capital for a newly-launched E50m fund for small-cap French LBO opportunities.

LBO France, the French private equity house headed by Gilles Cahen-Salvador, is to focus on smaller LBOs for its sixth fund, Hexagone, which it has launched this week.


LBO France, which normally makes investments of between E50m and E500m, is seeking to raise E50m for French LBOs across all sectors, targeting investment in businesses with enterprise values ranging from E10m to E50m.


LBO France team will manage the Hexagone fund alongside its White Knight mid-market LBO fund. The firm has recruited Jean-Marie Leroy to work specifically on Hexagone investments. Leroy joins the firm from Paribas, where he specialised in small transactions.


The firm will make between ten and twelve equity investments, from E2m to E10m each, in industrial and service companies. No sector is specifically targeted. The firm said that several acquisition opportunities are now being reviewed and the first buyouts are expected in the third quarter of 2003.


Professionals in France frequently talk about the abundance of opportunities at the lower end of the French buyout market, which attracts little attention from the larger international buyout firms. Despite the lower level of interest, there has been an average of 100 transactions completed every year since 1997.


In a statement, LBO France said the lower-end of the market provided acquisitions at reasonable multiples that offer big profit potential. Hexagone's IRR target is 30 per cent.


Since its creation in 1985, LBO France has raised six funds and completed 44 acquisitions. LBO France currently manages three private equity funds. In addition to Hexagone, the firm manages White Knight, which targets mid-market LBOs with enterprise values from E50m to E500m and Nexstar, a French real estate fund. LBO France's previous investors have already committed to half of Hexagone’s fund target.


LBO France has already been involved in a number of small-market transactions via its earlier funds. The firm acquired Nappage Moderne, a French manufacturer of paper napkins and tablecloths, and a E9.3m LBO of Serpaul, which operates the Puces de Saint Ouen, Paris' outdoor antiques market, in 1999.