Eurazeo PME IV holds 1bn close

“What is super important with this new fundraising is that it demonstrate the capacity of Eurazeo, which was historically a balance sheet business, to transform itself into a third-party management business,” Millet said.

Eurazeo PME III held a final close in 2017 after raising EUR 658m.

Eurazeo manages a range of other private assets strategies and its recent fundraising activity includes the first close at EUR 200m of the Sustainable Maritime Infrastructure Fund in May, as well as the launches of Eurazeo Capital V and Eurazeo Growth Fund IV.

Investors
The fund, which was launched in March 2021, has attracted asset managers, sovereign wealth funds and insurance companies and family offices. Institutional and private investor commitments make up 60% of the LP base, with the remaining 40% from Eurazeo’s balance sheet. LPs previously represented 38% for the predecessor fund.

The geographical makeup of the LPs is mainly French, representing 64% of commitments. Other European countries stand at 24% of the share, with the remaining 12% from Asia.

Around 95% of the existing LPs have re-upped their commitments in the fourth fund, with some having increased their ticket size significantly, Millet said.

Investments
Eurazeo’s fourth PME fund, which is led by three managing directors Erwann Le Ligné, Pierre Meignen and Benjamin Hara, will largely follow its predecessor in targeting French small to medium size businesses generating between EUR 10m to EUR 20m in EBITDA, Millet said.

Asset-light businesses will remain a core focus of the group and will be where it will find opportunities in areas such as technology, B2B services, healthcare and financial services. It will also consider consumer assets, but on a selective basis, he said.

Where the fourth fund will differentiate from previous vehicles is the increased capacity to invest in 10 to 12 platform companies, versus eight platform companies in previous strategies, he said.

Geographical diversification will also be a feature, with Eurazeo considering at least one to two platform companies in non-French markets such as Germany, Italy and Benelux, he said.

In addition, bolt-ons will be a more prominent feature of the fund, with 40% of the EUR 1bn capital earmarked for acquisitional growth, as opposed to the previous 20%-30% level for previous funds, he said.

Eurazeo has made nearly 100 bolt-ons to date for the 24 platform companies that the GP has invested via its PME strategy, he said.

Around 40% of the fund has already been deployed via five new investments: cybersecurity group i-Tracing; corporate legal automation tool DiliTrust; employee engagement platform WiiSmile; veterinary clinics chain Sevetys; and insurance broker Groupe Premium.

Eurazeo is in “no rush” to invest given its latest deployment progress, especially as it has two to three years remaining for its investment period, he said.

Its deployment progress also means that it can concentrate its efforts on monitoring and integrating its existing portfolio companies, bolt-on acquisitions and also exiting some of its remaining portfolio, Millet said. There are three to four potential exit candidates from the PME strategy in the coming 12-18 months, he added.

Recent disposals from the SME strategy include Orolia, which reaped a 3.7x money multiple; Vitaprotech, which was sold for 3.2x; and Intech Médical, which the GP exited for a 3x money multiple, he noted.

People
Eurazeo – Olivier Millet (managing partner for small-mid buyout)

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