The regulator has cleared the launch of the vehicle, which begins fundraising this month with a target of €15m and a plan to acquire around twenty European SMEs through search funds.
Arada Capital Partners, the private equity vehicle advised by Javier Puig and managed by Tressis Gestión, has received approval from the CNMV for its launch and will begin fundraising this September.
The investment thesis is to acquire close to twenty European SMEs, sourced and managed through a set of search funds. The firm is targeting €15m from private investors and family offices, mostly Spanish, with a first closing expected by the end of the year, and intends to invest in around thirty Spanish and international search funds.
As an investment model, the search fund allows investors to diversify by sector and geography while aligning the interests of the management team and the investors completely.
The approval consolidates a project begun two years ago, when Tressis and Javier Puig entered the growing search fund ecosystem. To date the firm has analysed more than sixty national and international funds, with advanced conversations under way with many of them to form the initial portfolio. Several of these search funds are already looking for a company to acquire and manage; others begin their search this month.
Jacobo Blanquer, chief executive of Tressis Gestión, notes that the launch continues to complete the firm's alternative investment proposition through innovative vehicles. The search fund has developed considerably in other countries and offers the opportunity to invest in companies with significant growth potential, thanks to the talent of the entrepreneur who will run the business day to day and the continued support of a group of experienced investors.
Arada will take minority but relevant stakes in small and medium-sized companies across Europe. The size of the vehicle allows the firm to actively support search funds in the search for their companies, in the subsequent acquisition process, in value creation once acquired, and in the eventual exit.
According to studies by Stanford (2022) and IESE (2020), in the United States — where the model has thirty-five years of history — the average return across the last 526 search funds analysed was 35.3% IRR at 5.2x MOIC. Across the rest of the world, including Europe, where the ecosystem is developing rapidly, average returns stood at 28.5% IRR.
Spain is the most active country in Europe for search funds and third globally, driven by greater entrepreneurial appetite, a growing number of SMEs facing a delicate succession, and the scope for value creation and professionalisation in this type of company. The typical target is a business with a track record of profitability and growth whose owners want to sell. We seek to give continuity to the fundamental pillars of the acquired company's success and to build a second phase of growth on the founder's legacy — transactions that banks view favourably, given they involve proven, solvent businesses with sound financial structures.