Less specialisation in southern Europe as generalists flourish

"LP interest in southern European fundraises has really come back in the last couple of years," says Sunaina Sinha of placement agent Cebile Capital. "This is partly due to the difficulties with deploying capital in the more mature northern markets, which are associated with very high pricing."

The six months leading to January 2018 saw more GPs from southern Europe hold the joint most first closes than any preceding six month period since the start of 2012. For first and final closes combined, it ranks joint second with the second half of 2015, trailing the second half of 2014.

Cebile is acting as adviser and placement agent to Progressio SGR, which held a final close on €86m in January for its third fund and targets businesses across a range of sectors in the Italian mid-market. However it's not the only successful raise with a less differentiated strategy in the region.

A top level analysis of all primary PE and VC vehicles to hold a close since the start of 2016 shows that just 38% of those in southern Europe have a specific specialised sector or other clearly differentiating strategy. For its northern neighbours, DACH and Benelux, this is 64% and 75% respectively. Sinha thinks this will continue into 2018: "Funds in the northern European markets need to have more of a niche, which is why I think we will see more interest in sector specialists and funds with a more differentiated strategy."

Wide net
Part of the reason for this is that there are less opportunities in a less mature market. This becomes apparent when the same comparison is done with the CEE region, where less than 7% of vehicles raised in the same time period have a specialisation beyond investing in a specific country or group of countries in central or eastern Europe.

When there are fewer opportunities, having good access to exposure in a region is seen as differentiation enough on its own. Another example of this is Italian buyout firm Alcedo SGR. The GP closed a €195m vehicle in May 2016, which is approximately 41% deployed already.

"We found strong interest from international LPs in our latest fundraise," says Alcedo's Michele Gallo. "They appreciated our business model of getting the best opportunities whatever the sector, whatever the market. If you look at the funds that do try to specialise and then you look at their portfolios, you often find that in reality there's not such a specific focus because the offering is limited."

The region also represents good relative value to northern Europe in terms of pricing. Alcedo's third fund had an average entry multiple of less than 6x EBITDA and the new fund so far has an average of between 6-7x. Alcedo's Maurizio Tiveron says: "The market in the Nordic countries, for example, is much higher than in southern Europe, and the markets here are growing much faster than in the Nordic regions or in the UK."

However, that's not to say that specialist funds don't attract support when they do come along. Italian buyout house DeA Capital is already having a busy year with several differentiated fund strategies. It held a final close for the Taste of Italy fund on €218m, which exclusively targets food and agriculture businesses in Italy as well as launching a second corporate credit recovery fund, Idea CCR II.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Fundraising
• Southern Europe
• Top story
• Alcedo SGR
• Progressio SGR
• Spain
• Italy