Essling holds first close on €90m for Co-invest 3

Francesca Veronesi
11 November 2019

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Essling Capital has collected in excess of €90m for Essling Co-invest 3 (ECI 3) and is aiming for a final close on €120m in Q1 2020, Unquote understands.

Each vehicle of Essling Capital's co-investment programme has a 12-month investment period and fees are charged not on commitments but on invested capital only. The fund's predecessor, Essling Co-invest 2, held a final close on €116m in Q1 2018.

The terms of ECI 3 will be 1% management fee, 7% hurdle and 20% carried interest. Essling expects to generate an IRR of 15% and 2x invested capital, a person familiar with the situation told Unquote.

The private equity team of French asset management firm Massena span out and rebranded as Essling Capital in 2017. Essling kicked off by managing co-investments, which are the minority transactions the team was specialised in when working at Massena. It subsequently expanded its activity to funds-of-funds and majority buyouts, recruiting professionals from existing teams and raising new funds. The GP held a €100m first close for Essling Expansion in February 2019.

Investors
European high-net-worth individuals, family offices and small institutional investors make up the current LP base of the fund. High-net-worth individuals made the most commitments and most of them have also backed Essling's expansion fund.

Investments
ECI 3 follows a similar strategy to its predecessors and will back minority investments in LBOs over a 12-month period, investing between €10-30m per deal. Portfolio companies will typically have a valuation ranging between €100m-3bn.

The previous co-invest funds were equally deployed across France, the rest of the EU and the US. The third co-investment fund has not completed an investment to date but it could soon back three companies in the US, Unquote has learned.

The fund's predecessors have previously backed the consumer goods, finance, industrial, services, food and healthcare sectors.

The first Essling Co-invest fund, closed towards the end of 2016 on €100m and known as Massena Opportunities Millésime, has already returned nearly 80% of the invested capital. This included the sale in November of Citri&Co Group, which generated a multiple of 2.6x invested capital. Essling had invested in Citri&Co alongside Miura Private Equity in 2016.

People
Essling Capital – Alexander Cuniasse, Louis Hamon (co-heads of private equity co-investments).