Black Toro Fund II to close on €350m in Nov – Exclusive

Spanish special situations manager Black Toro’s second fund, which is on track for a final close, has just announced a €30m investment in women’s shoe retailer Marypaz.

Barcelona-based special situations manager Black Toro Capital's second fund is on track to close on €350 million in November, partner Jose Manuel de la Infiesta told PDI sister publication Private Equity International .

Black Toro Capital Fund II, which targets distressed, mid-sized businesses in Spain, has a hard cap of €400 million. It now has total commitments of €250 million, while the firm's GP commitment is €10 million, de la Infiesta said. Allstate Investments, the investment arm of US-based insurer Allstate, is a cornerstone investor in the fund.

On Thursday BTC announced a €30 million investment in Marypaz, a family-owned women's shoe retailer based in Seville, whose offerings include lace-up platform sandals and ballet flats. Marypaz is Fund II's fourth investment; the fund is now 60 percent deployed.

Marypaz, which leases 221 stores in Spain and another 34 in countries including Portugal, France, the United Arab Emirates, Egypt, Guatemala, Honduras, and the Dominican Republic, is a “classic example” of the kind of business that's attractive to BTC, de la Infiesta said, as the private equity firm focuses on financial, not operational, turnarounds.

BTC's competitive advantage is that it operates in a market which is untapped, de la Infiesta said. BTC looks to make debt as well as equity investments in Spanish companies with revenues of between €50 million and €1 billion, which are operationally sound and have viable business models, but are struggling with financing and liquidity constraints.

In many cases these companies are owned by banks, which are seeking to reduce their exposure to such businesses as Spain's financial sector undergoes an extensive restructuring in the wake of the 2008 crisis. The number of banks has fallen from 45 in 2008 to 9 now, de la Infiesta noted. 

“Financing has dried up” for many Spanish businesses as a result, he said, adding that 90 percent of Spanish small and medium-sized enterprises have traditionally depended on bank-sourced capital.

“That's why we say: this is not a window of opportunity, but a long term investment scenario,” de la Infiesta said.

BTC is taking an equity stake of about 60 percent in Marypaz, and is investing in the business in two phases. The first phase, which has already taken place, involves investing €10 million to improve Marypaz's working capital capacity and stabilise its financial situation, while the second phase involves an additional €20 million investment through a convertible loan, expected to kick in by the first quarter of next year.

Following BTC's investment and Marypaz's internal restructuring, which entailed reducing fixed costs and optimising the company's international supply chain, as well as striking a deal with the majority of its creditors, the business is in a position to restore growth to the levels seen before the crisis, de la Infiesta said.

Marypaz reported sales of €97 million last year, and this year's numbers continue to be strong, he said.

BTC Fund II has invested more than €70 million in the past nine months. Its other three investments are Antibióticos de León, a pharmaceutical manufacturing company, Torrot-Gas-Gas, which makes motorcycles and scooters, and Carbures, a manufacturer of carbon fiber composite structures used in the aerospace and automotive industries.