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Portobello targets €300m for Fund III

The Spanish firm, which is in pre-marketing and will officially launch in September, is aiming to secure a €150m first close by the end of the year.

Portobello Capital, a Spanish mid-market investor, is targeting €300 million for its Portobello Capital III, according to several sources familiar to the matter. 

The firm, which is in pre-marketing, will officially come to market in early September, a source told Private Equity International. 

Both international and local investors are  performing due diligence on the fund and Portobello aims to hold a €150 million first close by the end of the year. The firm hopes to wrap up its fundraising next summer, the source added. 

Portobello declined to comment on fundraising. 

It will be the firm’s first fund raised under the name “Portobello”. In 2010, the current team, consisting of five investment professionals, spun out from Ibersuizas Capital, a captive vehicle owned by a group of Spanish entrepreneurs, in which it had a 34 percent stake. 

The majority shareholders of that management company tried to get further control of the company, which resulted in a dispute with the investment team. The disagreement came to a head when 90 percent of investors in the fund decided to fire the management company and remove the GP, the source said. 

In January 2011, the five investment professionals were appointed as the new GP. The team renamed the firm Portobello Capital and the existing fund was also renamed Portobello Capital II. The firm is now run by three senior partners: Juan Luis Ramírez Belaustegui, Ramon Cerdeiras and Iñigo Sánchez-Asiaín; and two partners: Fernando Chinchurreta, who is close to retirement and sits on some of the boards in Portobello’s portfolio companies, and Luis Peñarrocha, who was promoted from director to partner in in the spin-out from Ibersuizas Capital.

Portobello Capital II, a €331 million 2006 vintage, has been fully invested, with some left over capital for add-on acquisitions. The vehicle has returned “almost 60 percent of the fund” to its LPs and is  being valued at 1.83x, the source said. 

Portobello, which is planning another divestment before the end of the year plus some dividend recapitalisations, aims to have returned  100 percent of the fund by year end and therefore felt it was now “an appropriate timing to starting fundraising”, the source added.  

The investment climate in Spain is “much better now” and it’s “a good time to acquire companies in Spain”, according to the source. “There are a lot of people exiting non-core assets. There’s little equity so there’s low competition and that means that prices are very attractive,” the source said.  

Portobello, a generalist firm which invests in Spanish mid-market companies between €30 million and €300 million, is understood to target growth in internationalising Spanish companies as well as local growth prospects in for instance healthcare and the outsourcing of public services. 

Some LPs in Portobello’s second fund include: ACG Private Equity, Apen Private Equity, Danske Private Equity, European Investment Fund, Societe Fonciere Financiere & de Participations and Tapiola Mutual Pension Insurance Company, according to PEI’s Research and Analytics division