Cerea to launch third buyout fund

Alessia Argentieri
11 June 2020

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French private equity firm Cerea Partners will launch a third buyout fund with a тЌ250m target and тЌ300m hard-cap by the end of the year and a fourth mezzanine vehicle next month.

"Despite the coronavirus pandemic our funds are performing very well," Cerea Partners CEO Michel Chabanel told Unquote. "The interest from our LPs has remained high and we are ready to proceed with our new projects."

The new buyout fund, Cerea Capital III, will follow the same strategy as its predecessor, Cerea Capital II, which held a final close on €225m in January 2017, surpassing its €200m initial target. The vehicle is currently around 75% deployed.

"Most of the food and beverage sector is very resilient and we do not expect a decline in demand, but only short- to long-term shifts in food consumption channels," said Xavier Renault, a partner at Cerea. "Most of our investees are doing pretty well, none of them have interrupted their activity during shutdown and only two Cerea businesses have encountered a slight negative cash impact due to it. Overall, we forecast a positive performance for our portfolio."

Cerea Capital II has recently acquired a majority stake in French robotics systems specialist Pagès Group. Cerea plans to support the company in reinforcing its presence in the food processing segment, boosting the development of its robotic offering and further bolstering its expansion in the international markets.

The GP told Unquote that it has signed exclusivity for one new deal in the packaging sector and expects to close it by the end of June.

"During the Covid-19 emergency, we have been pretty much active with one exit at the end of March and two new investments on the private equity side," said Chabanel. "Regarding the entering dealflow, we are very careful in evaluating and selecting new opportunities, focusing, more than ever, on resilient businesses."

Cerea Capital III will acquire majority stakes in European companies with enterprise values in the €30-150m range. It will deploy equity tickets of €10-25m and make co-investments with its LPs for larger deals.

Like its predecessors, the fund will target deals across the entire food and beverage value chain. Geographically, it will deploy a large portion of its capital in France, but also look for opportunities in Italy and Spain, where the firm has teams of senior advisers, and in western Europe.

Cerea Capital III plans to build an LP base primarily composed of institutional investors, mainly pension funds, funds-of-funds and banks, and for a smaller portion family offices. Around 90% of its investors are expected to be from France.

Cerea also expects to launch the fourth generation of its mezzanine vehicles next month. Cerea Mezzanine IV will have a €250-275m target and invest in companies with enterprise values of €20-300m, providing financing in the €5-25m range. It will primarily target France but also invest in the rest of Europe, with a special focus on Spain and Italy.

The fund will be larger than its predecessor, Cerea Mezzanine III, which closed on €198m in 2016.

In addition, the GP manages a €337m debt fund, Cerea Dette II, which targets deals in France and western Europe, and provides senior debt through tickets of around €10-20m.