Espiga closes €140m lower-mid-market fund

José Rojo
22 October 2015

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After 18 months on the road, Spanish GP Espiga Equity Partners has closed its latest fund on €140m, a vehicle that will deploy €8-20m tickets for companies within the lower-mid-market segment.

Espiga Equity Fund features a 10-year lifespan with two potential one-year extensions. It follows the industry standard with regards to management fees, hurdle and carry.

Fundraising for the vehicle kicked off in early 2014 with legal advice from King & Wood Mallesons. A €105m first close was held in November 2014, helped along by the support of €1.2bn state-backed fund-of-funds Fond-ICO Global.

Speaking to unquote", a source close to the situation explained commitments slowed down during 2015 in a "complicated" fundraising market in Spain.

Investors
Espiga Equity Fund is backed by institutional investors for the most part, without any commitments from individual backers. The LP base is headed by the Caja Rural group, linked to Espiga since the GP's foundation in 1998.

During fundraising for prior Espiga funds, the bank provided the majority of commitments but its contribution has since shrunk to less than 30% after Espiga became an independent operator.

For the current fund, Caja Rural was joined by Fond-Ico Global and European Investment Fund as anchor investors. Additional LPs include insurers, pension funds and family offices.

Investments
Espiga Equity Fund will target MBO deals for lower-mid-market businesses where EBITDA falls within the €2-8m bracket. The fund, which will be sector-agnostic, will dedicate 80-90% of its capital to Spanish companies and keep the rest for those headquartered in neighbouring countries.

The vehicle will deploy €8-20m equity tickets with a sweet spot in the €10-15m range, unquote" understands.

Two investments have been financed by the fund to date. The first was Cintas Adhesivas Ubis, a Basque roll tape manufacturer in which Espiga bought a 35% stake in July 2015. This was followed by the recent acquisition of a majority interest in sports operator Enjoy Wellness.

Put together, both deals represent approximately 15% of Espiga Equity Fund's capital, which could be pushed up to 25% if Enjoy Wellness's expansion plans are backed with further capital increases, according to unquote" sources.

According to these same sources, the GP is currently looking at opportunities and has already initiated due diligence for a potential target.

People
Managing partners Carlos Prado and Juan Carvajal, as well as partners Carlos Lomas and Pablo Bilbao, will manage the fund. The team was recently bolstered with the hire of investment executive Lorenzo Thams.