21 Invest France eyes EUR 300m Fund VI target by year-end

Min Ho
27 January 2023

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French sponsor 21 Invest is aiming to complete the remaining EUR 150m of fundraising for its sixth fund by year-end, marketing and investor management professional at 21 Invest France Astou Ciss told Unquote on the sidelines of the IPEM conference in Cannes this week.

A large majority of Fund VI's commitments so far have come from re-ups, of which EUR 100m has been fully committed, she said. Another EUR 50m is expected to come from LPs who confirmed their interest back in 2022 but for a 2023 allocation program, she said.

"We're making the final effort to go and search for those remaining EUR 150m commitments, which are, of course, the most challenging, because once you've secured your existing LPs, you now need to convince prospective LPs and invite them to the platform, which can be difficult in this current environment," she said.

The GP is hoping to demonstrate that the strategy of its incumbent 2017-vintage Fund V, which is expected to be continued for Fund VI, will appeal to LPs following a radical departure on sector focus and governance from the strategy's prior generations, she said.

Between Fund IV and Fund V, 21 Invest saw Managing Partner Francois Barbier take the helm of the fund, leading to a change in governance, including a broadening in the investment committee that included all the senior members of the team. He also narrowed the focus of the strategy in healthcare, tech, business services and education from the previous generalist and opportunistic approach, she added.

Fund V gathered EUR 230m in commitments alongside a EUR 70m co-investment capability, versus a target of EUR 250m. 21 Invest raised EUR 380m for Fund IV, with a final close in 2011.

The GP used the fundraising process for its predecessor fund to prove that it could perform well with its new team setup and new investment strategy, said Ciss. "Our idea then was not to stay too long on the market and really demonstrate performance, with a good part in co-investment, and also make quick exits."

21 Invest believes it has demonstrated its success so far for Fund V, noting for example that it has seen 0% loss ratio for its portfolio companies so far. Fund V "went through everything from the Gilet Jaunes strikes to COVID" and still managed to double sales and EBITDA across its nine portfolio companies, Ciss said.

The portfolio companies in Fund V generate recurring revenues of 77%, with EBITDA margins of 23% of EBITDA and free cash flow generation of 81%, she said.

Demonstrations of the "category champions" in 21 Invest's portfolio include the exit of French business management solutions publisher DL Software, Ciss said. The company was sold to TA Associates in 2021 at 17.5x EBITDA multiple. The business generated EUR 25m in EBITDA in 2021, versus EUR 10m EBITDA based on an entry multiple of 12.4x when it was bought in 2017.

[Editor's note: The text has been amended post publication to note that EUR 380m raise for Fund IV was closed in 2011 and free cash flow generation for 21Invest is 81%.]