Venture capital in Spain (April 2018): at last the SME as a protagonist

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BY : Diego GutiérrezMay Fri, 2018

SMEs have received good news in recent months as they have seen an increase in the alternatives for obtaining financing for their growth plans. The private equity is developing funds specialising in this size segment of companies in Spain. Examples are the Sherpa, Investindustrial and Axon funds for technology companies.

SMEs have received good news in recent months as they have seen an increase in the alternatives for obtaining financing for their growth plans. The venture capital sector is developing funds specialising in this size segment of companies in Spain. Examples of this are the Sherpa, Investindustrial and Axon funds for technology companies.

Axon venture capital selected by the EU for its public co-investment programme

One thing is clear from the EU's point of view on venture capital: when it comes to funds, it is their size that matters.

This commitment was reinforced recently when the European Commission launched its VentureEU programme, an initiative designed to bolster the continent's venture scene by some €2.1 billion. It is an initiative similar to the one launched by Fondo ICO in Spain but oriented towards the venture capital is and technology companies.

However, it is not only about increasing the amount of capital; it is also about the type of capital. Compared to the US, European companies receive much more public funding and much less private investment. The EU wants to increase investment opportunities for private institutional investors, both from inside and outside the EU, in Europe's venture capital market.

In practice, VentureEU consists of six funds of funds for which the EU itself has committed €410M. The FoFs themselves are to be run by six dedicated fund managers, charged with raising up to €2.1 billion combined from public and private investors, which, according to the commission, will amount to a new backing of around €6.5 billion in European start-ups.

The Spanish technology fund Axon Partners has been one of the GPs selected to lead Venture UE. The news is a milestone for the fund manager, allowing it to move to the next level in terms of both the size of the fund and the impact due to its new role as an anchor investor in many pan-European funds. The programme makes it clear that Spain has a strong and long-standing venture capital industry.

Sherpa capital raises €150M for growing SMEs

Sherpa Capital, a private equity manager specialising in the middle market segment, has secured commitments from its investors for a new $150 million fund called Sherpa Capital Private Equity.

The new fund will focus on taking stakes, usually majority stakes, in profitable and growing small and medium-sized companies with EBITDA between 1 and 5 million euros. In addition, it will focus mainly on companies with good results that are in the process of expansion, and on opportunities in sector concentration processes (buy and bui ld).

The fund is expected to make between 8 and 10 investment transactions in total, each with a capital amount of between EUR 10 million and EUR 20 million.

With the launch of this fund, the fund manager will have two distinct investment strategies, continuing with its traditional strategy of investing in companies in special situations and adding the strategy of this new fund with the fund focused on profitable small and medium sized companies.

Unlike other private equity firms, and continuing with the strategy of the previous special situations fund, Sherpa Capital will also rely on the internal portfolio management team for the creation of value in its investees, a unique and differential element in the Spanish private equity market, which until now has been an important source of value creation for the companies.

Investindustrial closes a new growth fund in record time

Investindustrial, the Bonomi family's private equity manager, has announced the closing of a new €375 million growth fund to invest in small and medium sized European companies.

The firm has stressed that this instrument allows Investindustrial to cover the entire mid-market, consolidating its position as a major player in Southern Europe, while underlining that the fund has been raised in less than three months and has been oversubscribed due to the strong interest of existing Investindustrial investors. The latter base consists of 20 long-term investors. 66% of the capital comes from Europe and 34% from the US.

The new vehicle begins its journey after having made two investments: the French company Benvic, a European leader in the PVC compound industry (which has activities in Catalonia), and the British company OKA, a brand specialising in home and lifestyle furniture.

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