Mid Europa Partners, the central and eastern European buyout firm, has held the second and final close of its latest fund on €1.53 billion ($2.17 billion), breaking the record held by Polish rival Enterprise Investors.
The fund hit its hard cap of €1.5 billion from limited partners and the Mid Europa team committed €30 million. The fund was launched in May 2007. MVision Private Equity Advisers acted as its global placement agent. Kirkland & Ellis was the legal counsel.
Mid Europa tripled its 20-strong investor base for its second fund with more than sixty investors committing to its latest offering. These included Swiss fund of funds AlpInvest; the private equity arm of French insurer AXA; US bank Citigroup; the sovereign fund Government Investment Corporation of Singapore; US bank Goldman Sachs’ asset management arm and US fund of funds HarbourVest.
Thierry Baudon, managing partner at Mid Europa Partners, said: “Central and eastern European private equity has come of age. The investor demand shows the region is seen by the international investor community as a mainstream market.”
Baudon said the fund was nearly 40 percent oversubscribed. “We had to cut back on investors. We are at the point in our history where we are looking to establish a long-term investor base.” The firm sought to diversify, with 14 percent of its commitments from Asian and middle eastern investors, although it still received 50 percent of its investment from Europe and 36 percent from the US.
In its search for long term investors the fund targeted pension funds and endowments, which accounted for 28 percent and 13 percent of its investor base respectively. Fund of funds committed 24 percent, while government entities invested 16 percent and banks, insurance companies and other financial institutions made up 19 percent.
The fundamentals of central and eastern Europe are attractive to investors because the region is more resilient to shocks such as the tightening of the credit market, Baudon said. This is due to its unique macroeconomic environment, which combines the stability of the European Union and the rapid growth of emerging market countries.
The firm held the fund’s first close on over €1 billion in September. It is more than double the size of its nearest rival Enterprise Investor’s €658 million Polish Enterprise Fund raised last year. Mid Europa also raised it second fund last year on €650 million.
This second fund is 80 percent invested, although the firm has invested €850 million in total for the fund’s investors since its close. Baudon said his firm had needed to co-invest on the fund because the investment climate in the region had changed dramatically, justifying the increase in the third fund’s scale.