Javier Puig joined the Capital Alternativo podcast to discuss the firm's investment model, why search fund returns have held up, and where the European market goes from here.
In an interview for Capital Alternativo, a podcast by Sebastián Montoya focused on alternative investment vehicles, Javier Puig, Investor & Advisory Partner at Arada Capital Partners, set out his background and the firm's approach to search funds as an asset class.
With a degree in Business Administration from CUNEF, an executive programme in structured finance and private equity from Instituto de Empresa, and an MBA from IESE, Puig has built a career spanning strategic consulting, investment banking and private equity, with a focus on mid-market opportunities.
The investment model
Arada invests in SMEs across Europe sourced and managed through search funds, targeting solid businesses with growth potential led by capable new management teams. The strategy is rooted in launching independent, sequential investment vehicles that allow for quality control and close oversight. Geographic diversification and a collaborative post-acquisition approach are the aspects Puig identifies as differentiating.
On returns and alignment
The interview covers the historical performance of search funds, with average IRRs between 20% and 35% according to studies from Stanford and IESE. Puig attributes this to the profile of the target — SMEs with solid track records but ample room for optimisation — and to the strategic alignment between investors and entrepreneurs, which produces a management approach genuinely committed to the outcome.
The European market
Puig emphasises the growth of the model in Europe, and particularly in Spain. Despite a growing number of funds and entrepreneurs, competition remains manageable with ample opportunity — though he cautions that raising capital for new search funds could become harder as the ecosystem fills.
Arada positions itself as a pan-European vehicle present in Spain, Italy, Portugal, France and the United Kingdom. That spread allows the firm to draw on an extensive network and sector expertise, with an approach tailored to the specifics of each country.
Looking ahead
Puig sees growth coming through the creation of new vehicles following the same strategy. Europe remains the primary focus, though other regions accessible to the firm's network are under consideration. On his personal approach to investing, he notes a preference for assets with a proven track record, high recurrence and strong margins, and an aversion to more speculative investments.