Capital investment, or private equity, refers to the investment of equity in unlisted companies. This transaction is carried out by buying either existing securities from former shareholders or newly issued securities during a capital increase.
An investment fund is an investment vehicle that collects funds from underwriters (institutions, banks, family offices, businesses, etc.) and invests them by acquiring shares in the capital of unlisted companies.
Along evolving maturity stages, businesses experience various needs and risks and will use different types of funds and investors:
At the end of a private equity transaction, the investment fund becomes a minority or majority shareholder of the company alongside the management team. Therefore, their interests are aligned towards a common goal: the development of the company towards creating value over time.
The investment funds holding period runs on average between 4 and 6 years.
During the investment period, the fund is used to support businesses working in its activity sector by providing them with their strategic development know-how and professional connections. There is no interference in the business's operational management; a "sparring partner" approach is favoured by relying on competent and dedicated management.
Private equity plays a true economic role: more than 2,300 business received supported in 2019 (2,200 in 2018) and 74,600 jobs were created in 2018. Equity or quasi-equity funds are injected in risk situations where most "classic" lenders such as banks won’t engage, thus strengthening the fabric of small and medium-sized enterprises (SMEs). Business transfers are facilitated by offering a take-over solution upon the departure of a shareholder, thus providing the necessary liquidity.
The economic impact of private equity also plays strongly at the regional level, in particular through the action of regional funds. Regional funds focus investments on a specific geographic area, the focus being an integral part of its investment proposition. Advantages lie in a solid grasp of:
Regional funds thus maintain and boost the economic dynamism of French regions.
The Auvergne Rhône Alpes region is a particularly dynamic area with high private equity potential. Indeed, the Auvergne-Rhône-Alpes region ranks among the first ones in European regions, both in terms of the area covered and its population and of the wealth it generates. With an over 8 million-strong population and an economic fabric of more than 650,000 businesses (including 2,600 mid-size businesses and 22,000 SMEs), the Auvergne-Rhône-Alpes region is known for its economic dynamism and attractiveness.
With a 263 billion euros GDP, the Auvergne-Rhône-Alpes region contributes about 11.5% of the national GDP and is the second largest economic region in France. Its dynamic industrial economic fabric typically consists of a large number of innovative businesses. It is indeed the first industrial region in France with more than 500,000 jobs (both salaried and non-salaried) and the largest number of industrial jobs at the national level.
In terms of private equity, the Auvergne-Rhône-Alpes region is also the 2nd region of France in number of businesses supported. In 2019, 1.9 billion euros were invested by private equity investors in the Auvergne-Rhône-Alpes region, i.e. 16% of the total national amount. Nearly 950 companies of all types (start-ups, innovative businesses, young companies, SMEs, mid-size businesses, etc.), representing more than 150,000 employees, already receive support from private equity investors in the region. In addition, for several years now, the number of new companies supported annually exceeds 200 per year, illustrating the dynamism of the region.
Capital investors' attraction to this dynamic region is reflected through the growing number of investment vehicles created by national investment funds in the Auvergne Rhône Alpes region in recent years.
The management company InnovaFonds has created an investment fund called Partenaire Croissance I, specifically dedicated to the financing and support of SMEs and mid-sized businesses in the Auvergne-Rhône-Alpes region.
The Partenaire Croissance I Fund is involved in development capital or transfer capital operations, within growing companies with a general 5 to 100 million euro turnover. This Fund favours single investments of above 2 million euros.
InnovaFonds' organization targets both 2 to 5 million euros investment tickets for the Partenaire Croissance I regional fund and firm take-offs of up to 20 million euros in financial rounds involving other funds managed by InnovaFonds, as well as the network of underwriters and co-investor partners of InnovaFonds.
In addition to a strong attraction to the industrial and services to industry sectors, which figure strongly in the economic fabric of the Auvergne-Rhône-Alpes Region, in practice the Fund targets all activity sectors in a "whole investment approach to everything industrial."
This regional fund's investment strategy is clearly multi-sectoral, while taking advantage of the differentiating experience of the InnovaFonds team in the areas of high value-added industry and of services to industry.
The fund operate in both minority and majority shareholdings, on its own or with co-investors (underwriters and co-investor partners).
The Fund takes part in a strong proximity approach with all local economic players and is subscribed by a dozen corporate investors and business owners / "flagship" family offices of the Auvergne-Rhône-Alpes region (among which figure, in particular, the Auvergne-Rhône-Alpes Region, regional banking institutions, insurance and mutual insurance companies, Bpifrance Investissement, as well as Udimec).
12
participations maximum pour un portefeuille resserré
PME&ETI
régionales de demain sont favorisées
2M€
montant minimum du ticket
Present throughout the Auvergne-Rhône-Alpes Region in a hands-on approach of strong proximity from InnovaFonds' Lyon office, the Fund acts close to the regional territory, the team working closely within the economic environment as well as the environment of local councils (intermediaries in mergers and acquisitions, accountants, lawyers, private managers, banking partners, capital-investors...).
The management team's strong regional proximity also gives it a very good grasp of the local economic fabric and of regional business leaders.
The Fund's portfolio is diverse but deliberately focused: 10 to 12 participations in total, to better proactively support their development through a high-value-added investment approach and with the objective of fostering the emergence of tomorrow's regional mid-sized businesses.
In this context, the Fund operates alongside business managers in its activity sector by supporting them in the design and implementation of their development strategy. Our approach is a true shareholder partnership. The investment approach is therefore resolutely entrepreneurial, based on a simple objective, which is to create value over time.
We position ourselves as a true partner, committed but not intrusive: an involved capital partner, a driving force in providing the necessary resources to the participations of the Partenaire Croissance I Fund for their development projects, whether human or financial, in the following main areas:
In summary, the differentiating features of the Partenaire Croissance I fund within its market environment can be synthesized as follows: