French investment group LCF Rothschild Capital Partners has unveiled plans to move into private equity with the launch of a E200m LBO fund.
The LCF Rothschild LBO Fund will target smaller mid-market buyout opportunities in France, seeking to capitalise on what it sees as one of the most promising sectors of the European buyout market. The firm is contributing up to E30m to the fund, with the remainder to be raised from third party investors.
LCF Rothschild has recruited Erick Fouque and Eric de Montgolfier, who joined the firm in March this year from French LBO firm Astorg Partners. The former managing partners have been asked to lead the firm's move into private equity as it seeks to establish a buyout operation as one of the core businesses of its alternative investment offerings.
The French LBO market has nearly trebled in the last five years, a period which has seen a big increase in secondary LBOs, public-to-private transactions and more recently corporate restructuring. In 2001, LBO investment accounted for over half of the total E3.3bn invested by private equity firms in France.
LFC Rothschild is aiming to invest between E10m and E30m in traditional non-cyclical industries with an enterprise value of between E15m and E100m. The focus will be on build-ups and roll-outs, carried out in France or abroad by middle market French companies.
'There has been a move towards larger buyout funds in France which will allow a smaller mid-market fund like ours to take advantage. We plan to target mid-market buyouts as competition in this market is less intensive,' said Eric de Montgolfier. 'Smaller mid-market investments have greater scope for growth and also enables us to avoid the 'beauty contests' which are becoming increasingly common for the bigger transactions.'
LCF Rothschild currently has around E150m committed to venture capital investments, primarily in IT and healthcare.
The firm has not set a date for a first close as yet, although pre-marketing of the fund has indicated a lot of interest from investors.