- Arada Capital Partners completes first closing of its venture capital fund focused on Search Funds
- The fund invests in European entrepreneurs to facilitate the succession of SMEs.
Arada Capital Partners, the private equity firm advised by Javier Puig and managed by Tressis Gestión, announces its first closing with commitments close to 60% of the target capital, estimated at €15 million. The firm has an initial portfolio made up of 14 national and international Search Funds and a first company: IESMAT. In its first year, the privat equity firm has consolidated its presence in 4 geographies (Spain, UK, Portugal and France) and is finalising its entry into Italy before the summer, thus becoming one of the institutional investors of reference in the Search Funds ecosystem in Europe.
The objective of Arada Capital Partners is to acquire around twenty companies (50% in Spain and 50% in the rest of Europe and the UK) which it will manage through 30 national and international Search Funds. To raise capital, Arada Capital Partners has Tressis SV as its exclusive marketer among family offices, mostly Spanish, and entrepreneurs with experience in different sectors. Executives who are not only looking to invest but also to support entrepreneurs and new executives of investee companies.
Twenty entrepreneurs
The 14 Search Funds financed to date by Arada Capital Partners consolidate 18 entrepreneurs who are currently looking for a SME of between 1 and 3 million EBITDA, each of them in their respective geographies. The Search Fund investment model consists of acquiring one company, managing it and growing it, in many cases facilitating the succession and generational handover of family-owned SMEs. “During 2023 we plan to make several acquisitions of companies with succession issues across Europe. Although 2022 has not been an easy year, we have seen that among SMEs there is a lot of movement and very interesting investment opportunities”, confirms Javier Puig to elEconomista.es.
Arada Capital Partners’ first portfolio company is IESMAT, the Madrid-based scientific instrumentation supply, installation and support firm led by Enrique Sales, the founding partner of Signatus Capital, the Search Fund that identified and bought 100% of the Madrid-based company. “With the reinforcement of its sales and after-sales team, the upcoming opening of an office in Barcelona and the entry into Portugal, we expect a solid growth of the company during 2023,” says Javier Puig.
For the location and management of the companies in which Arada Capital Partners invests, the private equity firm finances entrepreneurs with a wide variety of profiles. “We look for sufficient commitment and experience so that our entrepreneurs can not only identify and acquire an SME, but also manage and run it later” explains Javier Puig.
Tax advantages
In addition to supporting entrepreneurs and providing a solution to the succession problem faced by many European SMEs, the private equity company “has tax advantages for investors (spanish legal entities) with a 95% exemption on dividends and capital gains received, as well as the consideration as assets used for economic activities for those participations of more than 5% in the share capital of the firm,” says José María Mingot, director of legal and tax advice at Tressis.
JC Partners, the Search Fund created and led by entrepreneurs Juan Pablo Ocampo and Chaid Neme, explains to elEconomista.es the alignment of interests between entrepreneurs, sellers and investors that favours this investment model. “On the one hand, the investor diversifies his portfolio while making a long-term investment with historical returns of more than 25%, while ensuring the continuity of companies with succession problems. On the other hand, entrepreneurs, in addition to the potential economic returns, have the opportunity to live a unique experience together with their investors by undertaking the acquisition and management of a stable company with a proven business model”.
After several months of looking for a company, JC Partners explains that, in the current situation of uncertainty, business owners who had not previously considered divesting are starting to think about selling their companies “as an attractive option, which translates into new investment opportunities in the market”.
Another Search Fund in which Arada Capital Partners invests and which is currently looking for an SME to acquire in Spain is Pleamar Partners, led by José Luis Soria and Carlos Gómez de Iturriaga. “We are doing an agnostic Search, with no restrictions on sectors or specific geographies. A clear trend is that we have identified younger owners who, despite being far from retirement age, want to turn their lives around or undertake new business projects. In both cases, the Search Fund model is well received. Sellers and entrepreneurs like to put faces and eyes on the people who will give continuity to their business projects,” they add.
Translated by Arada Capital Partners.
