EIF closes new 100 million fund after completing two deals with Portobello and Nexxus in Spain

The European Investment Fund (EIF), one of the main investors in the European private equity industry with 35,000 million euros under management, has closed its new vehicle specialized in secondary investments with a final size of 100 million euros. As confirmed by elEconomista.es, its broad investor base includes family offices, asset managers, foundations, insurance companies and pension funds from markets such as Spain, Italy, Germany, France, Luxembourg, Japan and Canada. The closing of the vehicle takes place in a particularly complex context for raising capital in the sector in the face of rising inflation and escalating interest rates.
Joaquín Alexandre Ruiz Tarré, Head of Secondaries at the European Investment Fund (EIF), points out that the new vehicle «has closed five transactions to date, two of them in Spain, with the asset managers Portobello Capital and Nexxus Iberia, meaning that it is already 25% invested».
A wave of transactions to facilitate liquidity
The investment strategy of the new secondaries fund focuses on transactions promoted by the managers themselves (known in financial jargon as GP-Led Secondaries or continuation funds), supporting the growth of companies in a scenario in which managers need more time and capital to be able to support their portfolios and investees.
In turn, the new secondaries fund combines this strategy with traditional investor buybacks, known in the market as LP-leds, with the aim of accelerating distributions. In a scenario where escalating interest rates, low liquidity in the M&A market and falling prices (up to 20% by 2023) are slowing the pace of divestment and capital raising, the secondary market is emerging as a liquidity solution for investors and managers.
«We are perceiving a wave of transactions focused on meeting the needs of both managers and investors, to offer and facilitate liquidity to those existing investors who want it. A transactional movement encouraged by the slowdown in divestments and, therefore, distributions in the industry,» explains Joaquín Alexandre Ruiz to this newspaper.
The market for private equity secondaries deals continues to grow, with an annual volume estimated at approximately €130 billion by 2023. «It is a market that has existed for 30 years and whose growth forecast is exponential. The forecast is for it to move €1 trillion within 10 years,» adds EIF’s Head of Secondaries.
Exponential growth
The global private equity secondary market will move 300 billion annually by 2025. Experts expect it to reach 4% of assets under management in five years. Despite the rapid growth of the industry, «it still represents only 2-3% of total private equity and debt assets worldwide, which implies great potential for expansion. It is also a very useful portfolio management tool in the current scenario to provide liquidity, unwind positions, buy time in companies and inject funds to support the growth of private equity investees,» he concludes.
The EIF currently holds a universe of more than 1,300 holdings in lower middle market funds and European venture capital. The secondaries team, led by Joaquín Alexandre Ruiz Tarré, is made up of 7 people and operates in a growing universe that, before the financial crisis, weighed 10 times less.

Read the full press release at this link