FIEE holds €127.5m first close for second fund

The vehicle was launched in April 2020 with a €175m target and €200m hard-cap, and expects to hold a second close by the end of the year. It targets a net IRR of 10-12% and an annual cash yield of 5-6%.

Law firm Legance Avvocati Associati and tax advisory Cisternino Desiderio & Partners advised FIEE on the fundraising.

FIEE is an Italian private equity firm dedicated to the energy efficiency and renewable sectors. It is managed by a team led by co-CEOs Raffaele Mellone and Andrea Marano, alongside president Fulvio Conti.

The GP's debut vehicle, FIEE I, was launched with a €150m target in 2016 and held a final close on €166m in 2017. The fund recently inked its last deal, by investing in Cremonesi, and is now fully deployed.

FIEE founder and co-CEO Mellone told Unquote: "Our new vehicle's fundraising has been very successful despite the coronavirus emergency, thanks to our strong track record and the solid performance of our companies. We initially planned to hold our first close on €100m, but were able to surpass our expectations."

Investors
Around 90% of FIEE's previous investors have re-upped to the new fund at this first close, the GP told Unquote.

The fund has two anchor investors: the European Investment Bank (EIB), which had backed FIEE I with €25m and now has committed €40m to the new fund; and insurance company Aviva, which had committed €15m to FIEE I and has backed this second vehicle with €30m.

In addition, the fund attracted commitments from several family offices, for a total of around €10m, and raised €5m from its management team.

The remainder came from Italian institutional investors, including insurance companies, banks, asset managers and bank foundations.

"We are building a solid and large investor base, and plan to attract several new European investors in the coming months," said Mellone. "The coronavirus emergency has made investors more cautious in their allocation decisions, but LPs can see that the companies in our portfolio are truly resilient and anticyclical, and have been able to react quickly and efficiently to the current shock. In H1 2020, our first fund's portfolio companies increased their revenues and recorded a 10% rise in EBITDA compared to the first half of 2019."

Investments
FIEE II invests in companies generating revenues of €2-15m, with high-growth potential. It targets businesses operating in the energy efficiency, renewables, lighting, co-generation, pollution control, smart city, smart parking and smart transport sectors.

The fund will invest around 80% of its capital in Italy, while 20% will be deployed in the rest of Europe. It will provide tickets of €10-35m, with a sweet spot of €25m. It can deploy up to 15% of its total capital in each deal.

The fund has already inked three deals, the GP told Unquote. It has invested in Rome-headquartered Metro Termica; Narni-based Frigenera Ingegneria; and Udine-based Ronest. To acquire Ronest, FIEE created Cold Chain, an aggregation platform to build a hub across the air conditioning and refrigeration sector.

The fund will initially deploy €10m per deal and subsequently follow on with additional capital. It plans to invest around 40-45% of its final capital across these three companies. The deals include the acquisition of shares and a capital increase to support the companies' growth and expansion.

The fund expects to close a fourth deal in Italy by the end of the year and is also in early negotiations for some deals in Spain, France and the Benelux region.

People
Fondo Italiano per l'Efficienza Energetica – Raffaele Mellone, Andrea Marano (co-CEOs).

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