Argos aims at October final close for new €550m fund

According to a source close to the situation, Argos launched Euroknights VII in May with a €550m target, significantly in excess of the €400m raised by the fund's predecessor in 2010. The GP expects to reach a final close before year-end, potentially in October, the source added. According to a Form D filed with the US Securities and Exchange Commission in June, Euroknights VII is domiciled in Jersey.

Should the vehicle successfully meet its target, funds in Argos's Euroknights family would have nearly quadrupled in size since 2000, when Euroknights IV was closed on €145m. In 2006, Argos raised €275m for the fund's successor, Euroknights V.

Argos closed its sixth fund, Euroknights VI, on its €400m hard-cap in December 2010. The fund had been launched around six months previously with an upper target of €360m. The fund was at the time said to have been heavily oversubscribed, leaving Argos with the task of scaling back approximately €400m of commitments from new GPs by more than half in order to pull the fund back within its hard-cap.

This predecessor vehicle is invested at around 82% across 13 deals, with a couple of upcoming investments expected to take it to full deployment.

Prior to launching the sixth fund in its flagship Euroknights family, Argos also branched out into growth capital by raising €45m for its Argos Expansion vehicle, which originally had a target of €120m, in 2010. The fund was designed to provide development and acquisition financing for small and medium-sized French companies, typically investing between €2-12m in sponsorless mezzanine and minority equity.

While initially focusing on France, Italy and Switzerland, Argos has expanded its operations across other European geographies in recent years, which is thought to be one of the reasons for the larger target of Euroknights VII. It opened a new office in Brussels in June 2013 to better take advantage of the Benelux market, complementing its outposts in Paris, Geneva and Milan. Senior partner Gilles Mougenot, previously based in Paris, is leading the Belgian office.

In February this year, Argos also set up operations in Germany with a Frankfurt office, to be headed by DI Kapital's Frank Hermann and three of his former colleagues. As Argos's partner in Germany, Hermann oversees a five-strong team featuring three of his former colleagues at DI Kapital.

Investors
So far, commitments to the seventh fund are understood to have mostly come from historic LPs. Euroknights VI had received commitments from roughly 30 investors, including pension funds (45%), sovereign funds (20%), insurance companies (10%), funds-of-funds (20%) and family offices (5%). The majority of investors were European, although 25% of the total raised came from US institutions and more than 10% of commitments came from Asia, Australia and the Middle East.

Argos has also been in contact with a handful of potential new investors for the fund, the source added.

Investments
In terms of strategy, Euroknights VII is expected to stick to Argos's core focus: focusing on smaller and mid-market buyout transactions involving European companies with a slant towards more unconventional or complex transactions, often sourced off-market. Given the planned increase in overall commitments, Argos is not expecting to target a higher number of portfolio companies (sticking to its usual sweet spot of 15-20 investments) but will instead up its maximum ticket slightly to €75m, against €60m for the previous fund.

The GP has been reasonably active so far this year. In April, Argos acquired Swiss software company RSD from Invision in a €50-100m deal. Earlier this year, the GP bought Fondations Capital's software developer Talentia for an estimated €100m and backed portfolio company Valco in its purchase of peer Guichon Valves in the first weeks of 2016.

On the exit side, Abénex Capital acquired Argos's stake in French pharmaceutical group Cisbio Bioassays in an SBO in June. The deal value fell in the €50-100m range, a source close to the deal told unquote", and generated returns in excess of 3x after a two-and-a-half-year holding period for Argos.

People
Argos Soditic – Guy Semmens (partner); Constance Jay (investor relations).

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