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Investindustrial aims for EUR 1bn close with third lower-mid cap fund

Min Ho
09 September 2022

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Investindustrial is expected to close its third lower mid-market fund in the coming months at its target of EUR 1bn, a source familiar with the fundraising process told Unquote.

The London-based fund held a first close for Investindustrial Growth III in April and has since raised 75% of the target, the source said. The fund was registered last August, according to Unquote data.

Fund III has sealed a deal for a business active in the medical device components sector, but the investment is yet to be announced, the source added.

LPs committing to the fund include European and North American asset owners, predominately public pension funds, endowments, foundations and other financial investors, the source said.

Abdrn, University of Michigan and Employees Retirement System of Texas are among investors in the incumbent flagship fund Investindustrial VII, a strategy that targets both large cap and lower-mid cap businesses and which raised EUR 3.75bn in 2019, according to Unquote Data.

Investindustrial’s Growth Fund, a predecessor strategy dedicated to lower-mid cap investing, raised EUR 375m in 2018. The vehicle has ended its investment period having made six investments. Fertility clinics GeneraLife and PVC compounder Benvic, which were part of the fund, have already been realised.

The sale of Benvic to Luxembourg-based International Chemical Investors Group, which was agreed last month with closing subject to regulatory approvals, is expected to generate a 4x money return, as reported.

Fund III’s investment strategy will take on a similar path to the sponsor’s large-cap funds but with a focus on lower mid-cap companies across Europe, in particular Italy and Spain. This includes an emphasis on sectors such as industrial manufacturing, healthcare and services, consumer and leisure, and technology, but applied to lower mid-market companies, according to the source.

The new strategy will also place a heavy emphasis on buy-and-build, the source added, noting that around one third of capital will be dedicated to bolt-on acquisitions.

Investindustrial declined to comment.