Alto Partners holds €210m final close for fourth fund

After launching in early 2017 with a €150m initial target size, Alto IV held a €103.5m first close in April 2017 and a second close on €152m in October that year.

According to a statement, the GP manages its fundraising activity in-house. Additionally, François Roux of Roux Capital assisted on a few key foreign accounts.

The fundraising process began in April 2017 and was relatively quick, despite being delayed by a few months due to the Italian elections, which scared a few investors, founding partner and director Raffaele de Courten told Unquote.

Italy is making a comeback as a mid-market economy, de Courten added. Demand from non-Italian investors was particularly high, as they were attracted to the GP's screening process of mid-market companies, vetting assets two or three times before adding them to the portfolio, de Courten said. Historically these investors have had limited exposure to Italy, but some LPs are returning selectively.

To date, the fund has completed two buyouts via its fourth vehicle. It bought a 72% stake in personal care business Tricobiotos in June 2017, followed by the acquisition of a 70% stake in Millefili, an Italian company that specialises in the production of yarns for the knitwear industry, in March 2018.

Legance Avvocati Associati and Bonelli Erede, respectively, acted as legal and tax advisers to Alto and the fund.

Investors
The fund attracted commitments from 70 backers, of which 56% are institutional investors and 38% are international LPs. The investor base includes pension funds, bank foundations, banks, family offices, funds-of-funds and private investors. Around 80% of larger existing investors re-upped.

One of the major LPs not re-upping is government-led fund Fondo Italiano d'Investimento, which no longer has its former investment programme open. Significant new LPs include non-Italian investors from the US, France, Switzerland and Luxembourg.

Although the fund was oversubscribed, the GP decided it would not allocate larger tickets, instead accepting a range of smaller tickets to its fourth fund.

Alto opened the fund to smaller investor tickets of €1-2m, sourcing capital from a lot of smaller but valuable LPs, typically high-value entrepreneurs who have been instrumental to sourcing deals and implementing the investment strategy. Around 10-15 of these LPs have been very close to the GP and proactive in supporting the fund, de Courten said.

Investments
Targeting majority and minority investments across Italian SMEs, Alto IV mainly looks at assets based in the northern regions of the country and with revenues within the €20-80m bracket.

There is a good inflow and the investment team plans to make another investment by the end of the year, de Courten told Unquote.

The GP typically does not get involved in auction processes, with the secondary market between funds very small in Italy, and instead has historically targeted family businesses.

Many Italian entrepreneurs are wary due to the crisis and are looking at the history of a fund when considering selling their business, de Courten added.

The GP aims to build a portfolio of eight to 10 companies with equity tickets in the €15-25m range. Alto focuses its investment strategy towards the food and beverages, consumer goods, luxury items, fashion, design, industrial mechanics, electro-mechanics and services sectors.

People
Alto Partners – Stefano Scarpis (chair, founding partner); Raffaele de Courten (founding partner, director); Mario Visioni (partner).

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