Route Capital Partners (hereafter RCP) makes investments in companies where it can get the equity capital majority and funds them with the support of a pool of equity co-investors. Subsequently RCP partners take on operating responsibilities on specific growth projects. Over the last five years, RCP closed six deals with an overall equity investment of 40 mln €.
The PE business is becoming increasingly fluid and dynamic in terms of investment strategies and operating models. Closed end funds are still the main investment solution, but relatively new (at least for Italy) hybrid or alternative structures are coming to the market each year.
SIX DEALS AND 40 MLN
An example of hybrid private equity is represented by Route Capital Partners, a company set up at the end of 2014 by three partners: Nicola Carminucci, a professional with 15 years of experience in private equity and later manager for various industrial companies including Interpump, Giuseppe Altieri, with an investment banking background, and Marco Ferrara, coming from strategy consulting where he worked for such companies as Accenture, Mckinsey and Value Partners
A mix between the traditional private equity model and club deals (pledge funds), Route Capital invests in SMEs – which proved to be able to generate cash also during economic downturn periods and which have relevant growth potential – in the manufacturing sector, especially in such businesses as the mechanic industry or oleodynamics.
” We syndicate the equity capital required to fund our deals to other Private Equity firms and a group of investors (including entrepreneurs, managers and family offices) who typically invest through ad hoc vehicles”
For each deal, RCP commits about 10% of the overall equity capital, for an average “ticket” so far of ~200.000 €. “We complement our funds with the financial resources – and skills – of our pool of investors. Each of them is free to choose the deal he or she wants to invest in and the amount of capital. In general, we close deals with an overall equity investment from 5 to 15 mln €, about 10mln on the average”. Since its birth, Route Capital has closed six investments and made two exits – with a return of about 3X the initial equity capital – raising a total equity capital of 40 mln €from both its 3 partners and 60 additional investors. “It is a model people like, transparency is the key word nowadays to convince investors”