EMZ in final stretch of EUR 1.2bn EMZ 10 fundraise

Goodwin has provided legal advice on the fundraise.

EMZ 10 was launched in early 2022 and has made one acquisition to date, acquiring Germany-based Fotofinder, a medical skin imaging systems developer, in April 2022.

The fund has two further deals in its pipeline, one of which is for an advisory business, Carré said, declining to comment on the timeline.

EMZ 10 will be managed by Carré and chairman Thierry Raiff, who have an investment team of 16 staff.

The minimum commitment for institutional LPs in the fund was EUR 5m and the GP contribution is 2% of the total target amount (around EUR 25m), said Carré.

The LP base consists mainly of insurance companies and pension funds across predominantly France and Germany, Carré said.

Fundraising has been challenging, noted Carré. Given the exceptionally high number of re-ups that LPs are having to negotiate this year, bringing on board new LPs has not been easy, he said. “We have had important reinvest from existing LPs,” he said, but added that it is difficult to predict when the fund will hold a final close as it will require support from new LPs to reach its target.

Carré added that the competitive environment is in part due to the fact that most funds have had shorter investment periods in recent years, said Carré. EMZ 9 had an investment period of two and a half years and deployment was quick, added Carré, adding that many of its competitors have seen the same trend.

Flexible capital
The GP’s predecessor fund, EMZ 9, held a final close on EUR 1.04bn in July 2020. Its first investment was made in mid-2019 and 45% of its deals were in Switzerland and Germany, with the remainder in France, Carré said. EMZ 9 is fully deployed, according to Carré. The vehicle has made two exits, including, France-based Airvance and Germany-based Ankerkraut to Nestlé, which generated a money multiple of around 2x.

EMZ 8 held a final close in December 2017 on EUR 815m, surpassing its target of EUR 750m. It made its first investment in mid-2017 and expects to be fully repaid by the end of 2022, according to Carré. EMZ is fully deployed, according to Unquote Data.

EMZ’s tenth vehicle will invest in B2B and B2C companies (with a preference for B2B companies) across the DACH region, Belgium, and France. The companies it targets will have enterprise values of around EUR 100m-500m, but the fund can also target larger deals, said Carré. EMZ 10 will generally deploy equity cheques in the EUR 15m-20m range, but as the GP has an “aggressive build-up strategy” it can also write larger tickets in the EUR 20m-120m range, according to Carré. The fund will make around 20 investments overall, which will be carried out over a two to three year period, with six to seven deals per year, he added.

Carré told Unquote that EMZ pursues a flexible capital strategy and has the ability to mix subordinated debt and equity. This allows the GP to adjust the risk and equity upside it is prepared to take across the capital structure from deal to deal. “This strategy caters to a very wide variety of investment situations including shareholders’ liquidity, expansion capital, and acquisitions,” he said. “We like the managers to be significantly involved in the equity with us to secure alignment of interests. Ultimately, we aim at maximizing risk-adjusted return.”

Typically, EMZ deploys 90% of the capital in its funds via new investments and reserves about 10% for add-ons. EMZ can also recycle early proceeds, according to Carré. The vehicle can co-invest with other private equity and venture capital firms.

Carré said that the sponsor is reviewing opportunities in Germany and Switzerland, but it remains cautious due to inflation and the indirect impact of the war in Ukraine on raw materials prices.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Buyout
• Mezzanine
• France
• DACH
• Benelux
• Fundraising
• France