Flexstone closes its Select Opportunities II fund on €300m

The fund launched in 2017 and was only marketable in certain European countries. It held its first close on €71m in December 2017 and, as of the end of February 2019, it had raised €255m.

With regard to strategy, Flexstone's managing partner Eric Deram told Unquote "All opportunities are considered and reviewed within clearly defined portfolio construction objectives such as diversification and concentration rules in terms of individual ticket size, underlying sector and geography exposure, and fund managers."

The fund's predecessor, Select Opportunities I, closed on €127m in 2014. This is fully deployed with a net IRR of 25% and distributions-to-paid-in (DPI) of 1.9x already returned to investors, as of March 2019.

The raised capital is split between two parallel vehicles that invest pari passu. One is a French FPS structure and the other is a Luxembourg SICAV Raif.

The firm takes a 2% management fee on a minimum investment of €500,000, which can drop to 1.5% and 1% depending on the size of the client's commitment. The fund has an 8% hurdle and 12.5% carry.

In December 2018, Natixis Investment Managers launched Flexstone by merging three of its private equity affiliates: Euro-PE, Caspian Private Equity and Eagle Asia.

Investors
The fund has 51 investors in total, 20 of which are institutional investors consisting of insurance companies, pension funds and banks. Two of Flexstone's largest existing LPs, Natixis Assurance and Caisse de Prévoyance de l’Etat de Genève (CPEG), invested in this fund also. Of the raised capital, 7% comes from private professional investors and family offices.

All Select Opportunities I investors made contributions to this vehicle, although new investors accounted for 60% of raised capital. One of the new investors is the firm's first Japanese LP, a life insurance company.

Investments
The fund will make co-investments and invest in secondaries opportunities. It will invest in the European small-cap and mid-market, and can invest a maximum of 20% of the fund's capital in one country.

The fund targets average equity investments of €12-15m, up from €5m for its predecessor, though Deram told Unquote "the fund keeps an opportunisitc approach".

The fund has already commited a combined sum of €101.5m in three secondaries transactions and seven co-investments. Deram told Unquote a possible eighth co-investment in a Switzerland-based company could close by the end of July and would mean the fund was deployed nearly 36%.

People
Flexstone Partners – Eric Deram (managing partner).

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