Consilium hits €95m first close

Amy King
21 February 2014

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Italian GP Consilium has held a first close for Consilium Private Equity Fund III on €95m after just three months on the road. Amy King reports

Italian fundraising plummeted to its nadir in 2013, when not a single buyout house held a final close. Against this challenging backdrop, Consilium launched its third fund in November last year with a €150m target and €200m hard-cap. The investor's defiance has paid off, having held a first close on €95m after just three months, with a final close expected before the summer.

All LPs to come in at first close are investors in Consilium's earlier funds, with the exception of Fondo Italiano di Investimento, which has made a €25m capital commitment.

"Several international investors are currently doing due diligence to come in at final close and they will represent the bulk of our fundraising from now onwards," says Antonio Glorioso, a partner at Consilium.

The current LP base is 55% composed of institutional investors - one of which has committed double the amount it injected into Consilium's previous fund - including the European Investment Fund. The remaining 45% is made up of family offices and high-net-worth individuals.

Putting concerns to rest
"It hasn't been easy," says partner Stefano Iamoni. "You have to meet a lot of people and answer a lot of the same questions so it is physically exhausting at the start. But once you gain momentum, it is exciting. Italy has been a topic that is mentioned a lot, but it's becoming less of an issue as sentiment is improving. Perception is positive and a lot of potential investors see Italy as an attractive market for private equity."

"People also ask about strategy," says partner Roberto de Rossi. "But that is part of our history and they are satisfied by the previous fund's performance, which is comparable in terms of strategy." Indeed, the vehicle has already achieved a distributions-to-paid-in multiple of 70%, with four companies remaining in the portfolio. The firm's maiden vehicle generated an IRR of 63.4% and 4.4x money over 10 years.

In line with existing strategy, the fund will take controlling stakes in 8-10 Italian firms with an enterprise value of €20-80m. The average leverage ratio will stand at 2.5x. Management fees for the vehicle stand at 2%, with 20% carried interest and an 8% preferred return. Sectors of particular interest include food, automotive, consumer goods and retail. The GP also intends to expand its exposure to the Tuscany, Lazio and Marche regions.

"Another topic that comes up a lot is the team," says Glorioso. "Investors are of course very keen on GPs who can deliver good results, but they are also looking for teams who want to institutionalise. They were very pleased with our approach and the fact that we have also promoted Marco Morgese to partner." Morgese joined the firm as an associate in 2007 from management and strategy consulting firm Booz & Co.

The GP has a strong pipeline of investments and is currently working on three transactions, one of which is expected to close in the coming eight weeks following the signing of exclusivity. According to unquote" data, just five private equity transactions have occurred so far this quarter in Italy; a 60% uptick is required in the coming month if Q1 is to escape the questionable title of quietest quarter across a five-year sample. Any deal completed by the newly cashed-up GP would therefore be a welcome addition in the local market.