(Financial News) July 10, 2012 – Spanish private equity firms Mercapital and N+1 have merged, the latest sign that the industry, widely considered ripe for consolidation, is adapting to a difficult fundraising environment.
The newly created firm, N+1 Mercapital, will cover both the Spanish and Latin American markets. It will manage more than €1.7B (Approx. US$2.1B) of assets, the firm said in a statement today.
The merger is the latest sign of consolidation in the private equity sector. In January 2011 US buyout house the Carlyle Group acquired Dutch investor Alpinvest. Following the acquisition, Carlyle now manages $159B of assets, according to the company’s website.
Abraaj Capital, the biggest buyout firm in the Middle East, acquired emerging markets private equity house Aureos Capital in February this year.
N+1 Mercapital will be co-chaired by N+1’s Jorge Mataix and Mercapital’s Javier Loizaga, who will also be the new entity’s chief executive.
The new firm will retain a 29-strong team, who currently manage investments in 26 companies, and does not currently have plans to reduce the number of people it employs.
The combined entity will begin raising a new fund next year, according to the statement. This will invest primarily in Spanish middle market companies, with a view to those companies growing internationally and particularly in Latin America.
Mercapital currently has a presence in Latin America, with offices in Sao Paulo and Miami. Offices are also planned for Mexico and Bogota in Colombia.
Last May, Private Equity News reported that Mercapital had refocused its investment strategy toward investing in Spanish companies it could expand into Latin America.
Loizaga said: “Considering that the recovery of the Spanish economy will be driven mainly from abroad, the role of the private equity industry today is to help SMEs to expand internationally.”
He added: “ We cannot wait passively for such recovery to occur, but must work actively to accelerate its arrival”.
N+1 Group has offices in the UK, France, Italy, Germany, Luxembourg and Turkey, as well as in Spain.
N+1’s Mataix said: “These are two companies with very similar cultures, which have followed parallel paths: they created the Spanish private equity market in the ‘90s, were pioneers in attracting large institutional investors specialised in private equity, operate in the middle market and in recent years have turned their strategy to focus on companies with significant international stories.”
The merger comes in a difficult fundraising environment for private equity firms, causing some to adopt new strategies or go into realisation mode. As previously reported by Financial News, firms including Duke Street and Terra Firma are considering switching to a deal-by-deal financing strategy, while Balmoral Capital, AAC Capital Partners UK, Advantage Capital and BS Private Equity have all gone into wind-down or abandoned plans to raise successor funds in the last year.