Equita Private Debt II holds second close on €131.5m

The fund was launched in September 2019 with a €200m target and €250m hard-cap. It held a first close on €100m in September 2020. The fund expects to reach its final close by the end of Q3 2021.

EPD II provides financing for buyouts of medium-sized Italian companies. It is larger than its predecessor, EPD I, a €100m vehicle that closed in September 2017 and is now fully deployed, with a year-to-date return of 9.5%.

EPD II aims to deliver an IRR of around 10%.

The vehicle is managed by Equita's head of private debt, Paolo Pendenza. Cebile Capital is acting as placement agent for the fundraise.

Investors
The fund recorded a significant re-up rate from its existing investors on the back of its first fund's success, the GP told Unquote. Its investor base includes Fondo Italiano d'Investimento and the European Investment Fund.

The second close was reached with capital committed by four institutional investors, including an Italian insurance company and an Italian pension fund.

The GP expects to attract additional investors in the coming months, including several Italian pension funds, banks, life insurance companies, foundations and family offices. Equita also plans to raise commitments from new LPs, primarily European funds-of-funds and asset managers.

"We are pleased that additional outstanding investors, including a major pension fund, have chosen to invest in our initiative, taking us closer to our set target of €200m," said Equita CEO Andrea Vismara. "These new commitments strengthen the investor base of our fund and prove that private debt is an attractive asset class."

Investments
EPD II deploys tickets in the €10-15m range in Italian companies generating EBITDA of at least €4m and revenues of €20-200m. It provides unitranche and subordinated debt in small to medium-sized buyout transactions led by private equity funds.

The aggregate leverage, including both the financing provided by the fund and senior bank debt, will be on average 3.2x EBITDA.

The fund has a generalist approach, investing in a wide range of sectors (excluding real estate and financial services), and dedicates a special focus to ESG investing.

EPD II invests in senior unitranche and subordinated bonds in sponsor-led transactions, with a maturity of five to seven years and a bullet repayment structure. The target returns are expected to be in line with those of the first private debt fund.

The fund has already identified three potential investments that could further accelerate its capital deployment over the course of 2021.

The vehicle has completed four investments to date, with total deployment of around €42m.

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