Alto Partners reaches EUR 150m first close on fifth fund

“The first close is, of course, quite important news to us, because it grants us continuity between fund four and five,” he said. “Of course, many investors will want to see a first close, and that is something which has reassured them on the fact that the fund is fully viable and able to invest.”

Despite the progress, de Courten recognises the challenge of attracting LPs to the Italian market, especially when it comes to foreign LPs, he said.

“You have to explain why [to invest] in Italy, [especially in light of] the macro environment,” he said. “If you don't know the Italian market, it will probably be a more difficult to decision to make. GDP indicators are basically the indicators of the general economy, but it is not necessarily a proxy for private equity returns because we're doing a cherry picking exercise”

Alto Partners has had a very good LP response in Italy, with satisfactory response outside Italy, he said.

Investors
Around 80% of the EUR 150m in commitments announced last Friday (4 November) has been through re-ups, including banks, insurers, pension funds, family offices and high-net worth individuals, he said.

A second closing is expected “in the course of next year”, with other institutional and private investors expected to join, de Courten said.

Investments
The strategy of Alto V will be broadly similar to the GP’s previous funds, targeting Northern Italian companies specialising in design, luxury and clothing, precision mechanics and electromechanics, food, services and specialised distribution, as well as chemicals and pharmaceuticals, de Courten said.

The fund’s sweet spot will be businesses generating EUR 10m-EUR 15m in EBITDA, although it can target larger companies through the GP’s co-investment capabilities, de Courten said.

A EUR 300m fund for Italy is relatively large, he said, despite appearing relatively small when compared to the US, UK or French market. “But it's the right size to tackle the Italian market for the type of investments we are used to do,” he said.

The GP’s pipeline currently includes companies in the food, healthcare, industrials and packaging industries, among others, he said.

Similarly, Alto Partners could see some exits over the next year, de Courten said. Of the nearly 30 exits the firm has conducted, around 80% were trade sales, although it could see more financial buyers for its businesses in the future, he said.

People
Alto Partners – Raffaele de Courten (founding partner).

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