Merieux Participations 4 holds €300m first close

Alessia Argentieri
24 May 2021

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Merieux Equity Partners has held a тЌ300m first close for Merieux Participations 4 (MP4), a growth and buyout vehicle with a тЌ500m target.

The fund has a hard-cap of €600m and plans to hold a final close by the end of the year, the GP told Unquote.

"We have built a strong LP base for MP4, with most of our previous investors eager to re-up to our new vehicle, thanks to our strong track record, operational expertise and extensive knowhow," managing partner Benoît Chastaing told Unquote.

In addition to the capital collected in this first close, the fund has also already secured further commitments of €75m.

MP4 will be larger than its predecessor, Mérieux Participations 3, which closed on €377m in January 2020. The fund was deployed across 12 companies in 30 months and is currently fully invested.

"The portfolio of our previous fund, MP3, has achieved excellent performance and strong value creation despite the pandemic, recording a 23% EBITDA compound annual growth rate," managing partner Jean-Francois Billet told Unquote. "Our new fund will pursue the same strategy as its predecessor, targeting the very resilient health and nutrition industry, which has been blooming in the last few years, producing a wide array of attractive investment opportunities."

The GP has also recently strengthened its growth and buyout (GBO) investment team with three new additions to its Paris office: Caroline Folléas has been appointed as a partner, Elias Belkadi as an investment manager, and Guillaume Martignoni as an analyst. Merieux's GBO team is now composed of 10 people, based across its two offices in Lyon and Paris.

In addition to its GBO range of funds, Merieux is also investing its venture capital vehicle OMX Europe Venture Fund, which closed on €130m in 2020.

Investors
MP4 received commitments from a large base of LPs, including Institut Mérieux – which intends to provide 20% of the total capital – as well as family offices and institutional investors. Most of the LPs in this first close are previous backers that invested in MP3 and decided to re-up to this new vehicle.

The fund's LP base is currently composed of European investors, but the GP plans to attract new LPs also from North America and Asia in the coming months.

The fund intends to raise around 40-45% of its total capital among family offices and high-net-worth families (including 20% deployed by Institut Mérieux), and the remainder from French and international institutional investors.

Investments
MP4 targets profitable, high-growth companies operating in the health and nutrition sector, acquiring primarily majority, but also minority, stakes.

The fund pursues the same strategy as its predecessor and maintains the same level of selectivity, while deploying slightly larger cheques. It provides equity tickets of €20-80m, with a sweet spot of €40-45m per transaction. It is also open to co-investments with its LPs.

MP4 targets three types of companies: assets producing high organic growth; businesses able to pursue a strong consolidation and buy-and-build strategy; and established platforms based across France and internationally. For growth opportunities, it will target companies with EV of around €150-200m, while for buy-and-build assets it will look for businesses with EV in the €200-500m range, and for LBO platforms it will invest in businesses with EV of around €1bn and more.

The vehicle plans to build a portfolio of 12 companies, investing 70% of its capital across the EU and the remainder in the UK, the US and Asia.

It intends to use moderate leverage, usually between 2-5x, customising the debt financing to the specific profile of the company.

The fund is currently in the process of closing its first two deals: the acquisitions of two European companies operating in the health and nutrition industry, with deployment of combined €235m, including some co-investments.