Arx Equity holds €54m first close for Arx CEE IV

Arx CEE IV is targeting €100m for investments in the region and has raised €54m at first close with a total of €66m in subscribed commitments. Arx managing partner Brian Wardrop told unquote" the fund's hard-cap and target are both €100m. An additional €12m of commitments is based on two LPs with percentage limitations on their investments in the fund, which will increase as additional capital is raised.

Wardrop said fundraising had begun formally in September 2015, following a geographic strategy revision by Arx, which excluded Poland as a core country. The response from LPs with a history of investing in CEE has been broadly positive, according to Wardrop, though investors with less of a track record in the local market have been less understanding of the choice to leave out the region's largest economy.

The GP did not use a placement agent for the fundraising and Arx CEE IV features industry standard terms and lifespan. Wardrop said he expects a final close of the fund by the end of 2016.

The GP's most recent fund was announced in May 2008 and held a final close on €102m in September 2009, €23m short of its target. Earlier this year, Wardrop spoke to unquote" about the market for fundraising in CEE, which has seen an increase in activity from local LPs.

Investors
At first close, LPs in the fund include the European Investment Fund, Czech retail bank Ceska Sporitelna, RSJ Private Equity and a number of family offices.

Wardrop said Arx has seen a lot of interest in the fund from CEE-based LPs, with the investor-base being heavily weighted with institutions and family offices based in the fund's target countries. The European Investment Fund is the largest backer of Arx CEE IV, with Czech LPs and one Slovenian investor making up most of the remaining fund investors.

The European Bank for Reconstruction and Development has invested in the firm's previous funds, but has since removed the Czech Republic from its investing remit due to the country's economic maturity and development. As a result, it is not able to back Arx CEE IV.

Investments
Arx CEE IV is a buyout vehicle focused on central and eastern Europe, though the GP expects to make the majority of its investments in the Czech Republic, where it is based.

The fund will not invest in Poland, following the private equity firm saying in 2015 it would stop investing in the country to focus on others in the region.

Arx will seek majority stakes in lower mid-cap companies and has an industrial bias, according to Wardrop, who is particularly bullish on manufacturing and precision engineering businesses in the region.

He expects due diligence processes on the fund's first investments to begin in August.

People
Arx Equity Partners – Brian Wardrop (managing partner).

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