Trajan Capital inks first deal prior to fundraise

One of the founders, Thomas Duteil, told Unquote: "Tanguy Tauzinat and myself, the founding partners of Trajan Capital, have personally invested in Thomas Plants, alongside high-net-worth individuals and family offices. The aim is to put in practice our investment strategy before we approach LPs to raise our maiden fund." Thomas Plants is the Brittany-based organic vegetable producer that was recently bought by the fledgling GP.

Both Duteil and Tauzinat worked at Edmond de Rothschild Investment Partners (EdRip) until the end of 2017 (the firm rebranded to Andera Partners in 2018). The kind of businesses EdRip portfolio companies would target for bolt-ons are the sort of targets the two investors are currently considering for Trajan, Duteil explains to Unquote.

Founded in 2018, Trajan specialises in the financing and managerial transmission of French SMEs. "Our investment strategy was built on the premise that over 20% of business owners in France are over 60 years old and don't necessarily have children who can take the helm of their business. Moreover, the practice of selling stakes to children is a lot less frequent in France than it is in Italy or Germany," says Duteil. Trajan structures its transactions to allow the founder to diminish his or her stake so that the incoming management is financially invested. This leaves both the vendor and new management with a minority stake while the GP takes the majority share.

The way Duteil and Tauzinat go about the process of completing the managerial transmission is to first select an entrepreneur desiring to take over an already existing business and then make a connection with a company's founder. 

The importance of increasing primary transactions in France has been clearly voiced by France Invest president Dominique Gaillard last year. When elected chair of the French PE trade body in June 2018, Gaillard underlined that one of the main goals of the organisation was to further convince leaders of family-owned companies of the benefits of private equity. Indeed, secondary buyouts have represented a vast majority of PE deals in France in the past decade.

Trajan invests tickets of €5-15m in French SMEs, which need to be profitable and generate an EBITDA of more than €1.5m. "We are a generic and sector-agnostic fund. We target primary transactions where a business owner is keen to see his business remain independent and to have a successful transmission of its business to a new CEO," says Duteil. "It is vital for us that the company has a proven, resilient business model and some sectors are preferred. At the moment we are looking at businesses that have a secure stream of revenues operating in the food-processing industry, B2B services, healthcare, education, or that are installed-base industrial companies."

Trajan's maiden fund will have a €100m target and €120m hard-cap, Duteil tells Unquote. The raise should start in the summer and is expected to reach a first close towards the end of 2019. The GP mostly looks to attract backers such as family offices and institutional investors predominantly based in France, but it is open to foreign LPs interested in backing a GP investing exclusively in French companies.

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