LBO France to raise third small-cap fund

The oldest buyout firm in France will go to market in January to raise the successor to its €150m small-cap fund raised in 2006. Meanwhile, its latest mid-market fund, reportedly targeting €1.2bn, will close before the end of the year.

LBO France will begin fundraising in January 2009 for its third small cap fund, Hexagone III, according to market sources. The size of the fund has not yet been disclosed, but the fund’s predecessor was €150 million.

LBO’s Hexagone funds invest in French companies with enterprise values of between €10 milion and €100 million, and typically execute a buy-and-build strategy. The firm launched its first small cap fund in 2003 and since than has acquired 18 companies and realised five exits.

In July, the Hexagone fund sold Interclean, a French industrial cleaning company with a turnover of €220 million, to trade buyer Samsic. The transaction netted LBO France approximately four times it initial investment, according to a source close to the situation.

In related news, LBO France is understood to be nearing the final close of its eighth mid-market fund, White Knight VIII, which is reported to be targeting €1.2 billion. LBO France normally raises funds every two years.

LBO France has €4 billion in funds under management, about 80 percent of which is committed to its White Knight mid-market funds. These funds focus on French-headquartered multinational companies with enterprise values anywhere between €100 million and €2 billion.

The firm was founded in 1985 by Gilles Cahen-Salvador, and says it was the first-ever French leveraged buyout fund manager. As well as the mid-market and buyout funds, the firm has been investing in real estate since 1999.

LBO France declined to comment on fundraising activity.