Argos Soditic raising €150m sponsorless mezz fund

Mezzanine’s resurgence gathers apace as the European buyout firm diversifies into loan financing in the changed investment climate post-credit crunch.

Argos Soditic, a Swiss buyout firm, has launched a €150 million ($221.6 million) sponsorless mezzanine fund, according to a statement. The entrance into mezzanine finance is a departure for Argos Soditic, which has previously raised five buyout funds. It is investing its fifth fund, which raised €275 million in 2006.

Gilles Mougenot, president of Argos Soditic, said the fund would offer two different solutions for leveraged buyouts, lending to majority-control leveraged buyouts or offering expansion financing through sponsorless mezzanine or minority equity positions.

Olivier Bossan, the former managing director of IDI Mezzanine and the head of the fund, said there were few independent mezzanine funds in Europe but the high and stable returns these funds offer meant Argos Soditic expected more entrants to the sector.

Mezzanine is experiencing a resurgence as alternative forms of funding have been denied borrowers since the credit crunch. Rival European mezzanine provider Intermediate Capital Group is raising up to £175 million (€231.8 million; $342.7 million) through a discounted rights issue after the firm increased its loan and investment book by 16.5 percent during the three quarters until 31 December. ICG said mezzanine was beginning to play an increasing role in leveraged buyouts again.

Earlier this week, Darby Overseas Investments, the private equity arm of Franklin Templeton Investments, hired Diane Smith to head its Latin American mezzanine business. Darby said it plans to significantly increase its Latin American mezzanine business through the establishment of several additional regional and country-specific funds.