Investindustrial closes Southern Europe's largest fund

The Southern European firm's focus hits investor sweet spot as the mid-market finds favour in the credit crunch.

Investindustrial, one of Southern Europe's oldest buyout firms, has closed its latest fund on €1 billion ($1.5 billion), ahead of a target of €888 million, making it the region's largest. Rival Italian firms Clessidra and Investitori Associati are expected to come to market imminently.

Investindustrial, founded in 1990, targets companies in Italy, Spain and Portugal across the full range of the mid-market.

The fundraising, advised by MVision, took just three months from beginning to end according to Andrea Bonomi, Investindustrial's managing partner. Bonomi told PEO the firm could have raised more and taken advantage of investor appetite for value-added mid-market firms.

We have not changed our strategy, but the market has changed.

Andrea Bonomi

He said: “We have not changed our strategy, but the market has changed. Investors are less interested in leverage for leverage's sake. They do not want generic private equity firms. The same is true of investee companies. People want help not just money.”

Despite fears of economic problems ahead, the firm's deal flow was strong, he said. “[Investors] can go through our track record and 70 percent of our returns comes from increasing sales and EBITDA not leverage.” He said this was useful in good times and essential in a more difficult environment.

He said the firm also hoped to profit from its “size agnosticism”, which meant it could invest across the full spectrum of the mid-market. Most recently Investindustrial launched a bid alongside BS Investimenti and the Hospital of Ontario Pension Plan for Ducati Motor, the Italian motor bike maker, at a price of €1.70 a share, valuing the business at €390 million. At the smaller end of the scale it has invested €30 million in Zero9, a content provider to mobile phones.

More than two thirds of the firms' investors re-invested, Bonomi said, increasing their commitments by 50 percent. In October 2005, Investindustrial raised €500 million for its third investment programme.

Bonomi said that fund was 85 percent invested with the remainder held back for the firm's buy and build strategy.

The latest vehicle will mark the next phase of the firm's evolution with the headcount growing by nine to 40 in the next 18 months. Bonomi said this would develop the firm's industrial approach to become more sector specific.

“One of our investors said we are moving into an era which will see the emergence of local champions. We

We are moving into an era which will see the emergence of local champions.

Andrea Bonomi

are building a franchise on industrial knowledge and added value. Today we have a mix of operating partners and financiers. This will shift further to sector focus.”

Investindustrial was an early mover in the development of the Southern European private equity market, and has been operating independently since its inception in 1990. The firm evolved from a division of the BI-Invest Group, a leading Italian financial and industrial group owned by the Bonomi family, which was established in the 1970s to manage the non-core investment portfolio.

It began life as an evergreen industrial holding company. In 2000, Investindustrial launched its second investment programme and first third-party fund, Investindustrial, with a final closing of €323 million.