Equita Private Debt II holds €100m first close

Alessia Argentieri
14 September 2020

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Equita Capital has held a €100m first close for Equita Private Debt II (EPD II), which provides financing for buyouts of medium-sized Italian companies.

The fund was launched in September 2019 with a €200m target and €250m hard-cap. It will be larger than its predecessor, EPD I, a €100m vehicle that closed in September 2017 and is now fully deployed, with a year-to-date return of 9.5%.

The fund, which aims to deliver an IRR of around 10%, is managed by Equita head of private debt Paolo Pendenza.

Cebile Capital is acting as placement agent for the fundraise.

Investors
The fund recorded a significant re-up rate from its existing investors on the back of its first fund's success, the GP told Unquote. Its investor base includes Fondo Italiano d'Investimento and the European Investment Fund.

The GP expects to attract numerous additional investors in the coming months, including several Italian pension funds, banks, life insurance companies, foundations and family offices. Equita also plans to raise commitments from numerous new LPs, including European funds-of-funds and asset managers.

Investments
EPD II will deploy tickets in the €10-15m range in Italian companies generating EBITDA of at least €4m and revenues of €20-200m. It will provide unitranche and subordinated debt in small to medium-sized buyout transactions led by private equity funds.

The aggregate leverage, including both the financing provided by the fund and senior bank debt, will be on average 3.2x EBITDA.

The fund will have a generalist approach, investing in a wide range of sectors, except for real estate and financial services, and will dedicate a special focus to ESG investing.

The fund will invest in senior unitranche and subordinated bonds in sponsor-led transactions, with a maturity of five to seven years and a bullet repayment structure. The target returns are expected to be in line with those of the first private debt fund.

The fund's deployment is expected to reach 26% of its target size shortly after first closing. Around €50m wil be deployed by the end of September, following two investments already completed, which will be transferred to the fund in the next few weeks. Two additional investments are expected to be closed by the end of this month.