Quantica SGR launches Principia II

01 March 2008

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Fund

Quantica SGR has launched its second vehicle Principia II, still in its fundraising stage with a target set between EUR20-40m entailing a 50% participation by the Italian Ministry of Innovation. This is part of a EUR86m government grant to be divided among six to seven operators.

The hurdle will be Euribor rate plus 2%, that represents a return-cap applied solely to the Ministry of Innovation; management fees will range between 2.5-3.0% depending on the final size of the fund, while the carry will remain the standard 20%. The fund has a lifespan of 10 years with the possibility of a two-year extension pending deliberation by the board. Pedersoli & Associati has been retained as legal adviser.

The fund is limited to investments in SMEs based in Southern Italy.

Quantica forecasts its first closing by March 2008 at EUR10m. Principia I has already closed transactions in Southern Italy and two more deals are in the Principia II pipeline for 2008.

Investors

The Ministry of Innovation will subscribe 50% of the fund, other investors could include Puglia-based Banca Popolare di Bari (a local bank with national prospects) and Fondazione Carical (bank Fondation in Calabria) each with commitments under the 10% of the fund's total target. The fund will accept subscriptions from professional/institutional investors with the minimum subscription being set at EUR1m.

Investments

The fund will target high-tech spin-offs and start-ups, with 40% of the fund being allocated to expansion deals. Investments are restricted to companies based in Southern Italy, including Abruzzo and Molise.

The transaction value will range between EUR1-2m in start-ups and EUR4-6m in expansion investments, while the investors will seek to acquire stakes ranging between 20-60%, with more emphasis on majority positions. Similarly, the investors plan to carry out four transactions per year, two spin-offs/start-ups and two expansions. Co-investment is possible. Transaction costs will be in part covered by a EUR3m fund established by the Government from the EUR86m grant.

Foreseeable exits lie in the secondary market and trade sales given current fluctuations in the stock markets. Proceeds from exits can be returned to investors.

People

The fund will be managed by Stefano Peroncini and Pierluigi Paracchi, who previously managed Quantica's first vehicle Principia I. They will be supported by a team of four other professionals and the team foresees hiring a new fund manager and analyst in the months to come.

Name

Principia II

Target

EUR20-40m

Launched

January 2008

Focus

VC, high-tech, Southern Italy, Abruzzo and Maurise

Contact

Stefano Peroncini

Address

Via Broletto, 37