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European Investment Fund launches secondaries vehicle – exclusive

The EU's investment agency will target vanilla and complex secondaries deals in funds that it is invested in through its primary platform.

The European Investment Fund, the EU’s investment arm, is tapping private investors to raise a dedicated secondaries fund, Secondaries Investor has learned.

The Luxembourg-headquartered body launched the fund in March targeting €200 million, according to a source with knowledge of the matter. The vehicle’s hard-cap is €300 million.

The fund will mainly target assets in which the EIF is already invested through its primary funds of funds platform. It has a mandate to buy portfolios of LP stakes, back GP-led secondaries deals and do co-investments, Secondaries Investor understands.

The name of the fund and which investors it is targeting is not clear.

Unlike the EIF’s primary investing business, the secondaries fund will focus on returns, not on its mission of providing funding for SMEs via investments in private equity and venture capital funds.

Among the GPs whose funds it has backed are Alantra, Innova Capital and Portobello Capital, according to PEI data.

For the past three years, the EIF has been investing a €250 million dedicated secondaries pocket using its own balance sheet capital, which it is using as a “shop window” for fundraising, Secondaries Investor understands.

The EIF has also been a seller on the secondaries market. According to its 2018 annual report, in the second half of the year the investment arm offloaded stakes in 13 tail-end funds in a deal that had yet to close. In 2017, it disposed of seven funds for a total of €12.4 million.

The EIF was formed in 1994 to promote economic recovery in Europe. Today it facilitates access to equity for high-growth and innovative SMEs and invests in venture and growth capital, according to its website. The investment body makes significant minority stakes in private equity funds using capital from the European Investment Bank and the European Commission.

A spokesman for the EIF did not return a request for comment.