Fondo Agroalimentare Italiano, a vehicle sponsored by France’s Unigrains, has reached a €40 million first close.
The fund, which has maintained its €50 million target and a €70 million hard-cap following the milestone, is backed by about 10 limited partners, Francesco Orazi, its investment director, told Agri Investor.
Unigrains is the first and largest of them, having committed €25 million. Of the others, 60 percent are foreign investors, comprising French and Swiss institutional investors, with the balance accounted for by an Italian family office and two entrepreneurs, Orazi said.
He added that domestic backers decided to pledge to FAI in a bid to diversify away from other sectors, while foreign investors were looking to increase their exposure to Italy. “These are of significant size but could not take the risk of setting up a direct investment structure in the country,” he said.
The fund will be managed by a subsidiary of Unigrains. It will be run by the team tasked with launching the agribusiness private equity fund of French bank Crédit Agricole in 2009. “Unigrains wanted to develop a structure in Italy, and we were a team that had worked together in the market for a while. So we met in the middle,” Orazi said.
Keeping it in the family
FAI is structured as a “typical PE fund” with a 10-year duration and possible extensions, he noted. Its preference goes towards minority stakes, or majority stakes alongside co-investors, in companies generating between €10 million and €150 million in annual sales. “We are looking for family businesses which are looking to raise capital from financial investors for the first time,” Orazi said.
That positioning, he explained, played to Unigrains’ strength, given its experience with family-run SMEs. It also allowed for bilateral negotiations, making it easier to bypass costly competitive auctions. The fund targets gross IRRs of 20 percent, Orazi explained.
FAI has already sealed two transactions: Trasporti Romagna, a logistics and transport business with more than €125 million in sales, executed several years ago; and Sfoglia Torino, a snacks maker which generated more than €27 million in turnover last year, completed in 2017. Both will be rolled into the new fund at cost, Orazi said, to shorten the investment period.
The third, currently being finalized, will see the fund acquire a majority stake in a family business alongside a co-investor.