InnovaFonds gears up for first close of new SME fund

Myriam Mariotte
24 January 2023

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French sponsor InnovaFonds expects to reach the first key milestones of its new SME-focused fund by the end of this semester, managing partner Anthony Dubut told Unquote.

Partenaires Managers I is gearing up to hold a first close on 70% of its EUR 100m target and make its first investments in H1 2023, he said.

Fundraising for the vehicle, which has a hard cap of EUR 120m and invests via mezzanine loans (around 70-80% of the total investment) and small equity tickets, started last September, having already received an undisclosed number of commitments. The fund aims to attract institutional investors such as insurers, pension funds, banks and family offices, Dubut said. Most LPs will be French, but it is also in discussions with Spanish, Dutch and Nordic investors.

The new vehicle will be deployed in fifteen companies and plans to start pursuing exits after a three and a half years investment period, Dubut noted.

Investments
Partenaires Managers I will invest EUR 5m-12m on average in French small industrial companies, Dubut said. Ideal targets will have a valuation of EUR 20m-EUR 80m and recurring and stable cash flows, he said.

InnovaFonds can invest in all segments of the industrial sector but has specific expertise in robotics, consumer goods, metrology and new raw materials. One of the firm's objectives is to guide portfolio companies – which often operate in highly polluting markets – in efforts to cut their portfolio carbon footprint, Dubut said.

As a hands-on investor, InnovaFonds plans to support companies' growth strategy, both organically or via M&A, with screening the French and North American markets for potential bolt-ons.

The GP receives up to 200 deal opportunities per year and works with financial advisors. It has offices in Paris and in Lyon and plans to open a new location in Nantes this year, which will enable it to work with local players.

The firm deployed EUR 50m last year and counts 30 companies in its portfolio. Among its recent deals are the acquisitions of Vertiv Industrial Systems, a developer and manufacturer of uninterruptible power supply systems (UPS), and Clesse Industries, a manufacturer of gas regulators, valves and fittings.

It also bought a minority stake in Novae Group, a consulting and engineering services provider; DMAX, a provider of moving services for individuals and businesses; and in professional clothing group Robur.

InnovaFonds has 14 employees and plans to add another this year, Dubut said. Last September, it hired former HSBC director Nicolas Bouchery as its new investor relations head.