Equistone VI holds final close on €2.8bn hard-cap

Nicole Tovstiga
12 March 2018

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Equistone Partners Europe has held a first and final close for its sixth mid-market buyout vehicle, its largest to date, four months after launching fundraising efforts in November 2017.

The Equistone team will also make a commitment to the fund, Equistone Partners Europe Fund VI (EPEF VI), alongside the institutional investors.

Demand was high from both new and existing institutional investors, and Equistone saw total potential commitments of €4bn, significantly exceeding the target, Unquote understands.

The firm has made around 150 investments since being established in 2002, and has overall generated 2.5x money on realisations with a 33% gross IRR. Across funds I-V, the realised investments have generated an average compound annual growth rate (CAGR) in sales of 9% and earnings CAGR of 10%, according to filed documents.

Equistone has nearly fully deployed its fifth fund, announcing nine investments and eight exits since January 2017. With up to 90% of the fund invested, the remaining 10% has been allocated for add-on acquisitions. Investments in the sixth fund are expected to commence soon, Unquote understands.

Investors
The fund diversified its LP base, attracting commitments from 56 institutional investors, with existing investors in prior Equistone funds providing around 75% of the capital, and the total number of investors growing nearly 30% on its previous fund.

Institutional investors hailed from western Europe and the Nordic region (accounting for 56% of capital raised), North America (28%), and the rest of the world (16%), including pension funds, funds-of-funds, sovereign wealth funds and insurance companies.

Investors in Fund V include US public pension funds California State Teachers' Retirement System and the Pennsylvania Public School Employees' Retirement System (PSERS), Germany's Allianz Capital Partners, and Singaporean sovereign wealth fund GIC, according to Unquote Data. A person familiar with the fundraising confirmed that all four had reinvested in Fund VI.

PSERS committed up to €85m into the new fund, following a first commitment of €65m in EPEF V in 2015, according to filings obtained by Unquote.

Investments
Following the fund strategy of its predecessors, EPEF VI takes majority stakes in European buyouts valued between €50-500m and works in a partnership with management teams. It targets mid-market businesses across France, Germany, Switzerland and the UK.

The fund is seeking to invest €25-150m per deal, and the GP is looking to manage around 25-30 portfolio companies from the fund. While the vehicle will mostly target majority deals, it will also have the ability to make minority investments. EPEF VI may also make investments in bridge financing instruments as well as hedging instruments at the portfolio company level.

People
Equistone – Rob Myers (senior partner); Guillaume Jacqueau (managing partner); Christiian Marriott (partner).