Mandarin holds €173m interim close for third fund

The fund was launched with a €250m target and a €300m hard-cap, and held a €148m first close in September 2019.

Mandarin expects to hold an additional close in February 2020 on €200m and a final close by June 2020.

Mandarin has been advised on the fundraising by Lancea and Cebile Capital, both headquartered in London.

The new vehicle will follow the same strategy as its predecessor, Mandarin Capital Partners II, which closed on €195m in 2016 and is now fully deployed. The vehicle completed eight investments, five of which were fully divested, and has returned 39% IRR and 2.2x capital to its investors.

Investors
The capital for this second close was raised from international institutional investors, including a French pension fund that committed around €15m, Unquote understands. Mandarin expects to raise an additional €30m by February 2020 from four Italian and international institutional investors, including a British LP that is expected to deploy a large ticket.

Most of the investors in MCP II re-upped to this third vehicle, including Italian family offices, high-net-worth individuals and pension funds, such as Inarcassa and Fondo Pensione Agenti Professionisti di Assicurazione, among others.

At this stage, 70% of the investors are Italian, while the remainder of the capital comes from outside Italy, primarily from the UK, France and the US. International LPs include HQ Capital, LGP, two American investors and one Middle-Eastern family office. In addition, the GP made a significant commitment to the fund.

Investments
The fund supports export-orientated companies able to sell around 60-70% of their production abroad and capable of further boosting their international expansion in Europe, Asia and the Americas.

It targets businesses with an enterprise value in the €30-70m range and EBITDA of €3-7m, operating in a wide range of sectors, including mechanical engineering, chemicals, cosmetics and food. It invests primarily in Italy, but can also deploy a portion of its capital in Swiss and German businesses.

MCP III deploys equity tickets of €15-20m and follows up with additional capital injections to finance a buy-and-build strategy up to €30m per portfolio company. It applies moderate leverage of around 2-3x EBITDA.

The fund has made two deals so far: coffee capsules producer Neronobile and luxury bags manufacturer Eurmoda.

Unquote understands that MCP III expects to make one bolt-on in the coming days by acquiring an Italian coffee business that will be added to its Neronobile platform. Following this bolt-on, the fund will be 18% deployed. In addition, it plans to acquire a German company and an Italian business in January 2020 and reach 30% deployment.

People
Mandarin Capital Partners – Lorenzo Stanca (partner).

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