The fund is already almost 25% invested in high-growth companies in France
May 29, 2024 (Preqin News) – Paris-headquartered Ardian, with $164bn in assets under management or advisory, has raised €530mn ($575mn) for Ardian Growth Fund III.
The fund closed above its €500mn target size with commitments from investors in 12 countries, including banks, insurance companies, entrepreneurs, pension funds, and government agencies. The fund is more than double the size of its predecessor, Ardian Growth Fund II, which closed at €230mn ($249.5mn) in 2018. Ardian’s Growth Team now has €1bn ($1.1bn) AUM.
The fund will target fast-growing companies across continental Europe, with sectors including software, web, and tech-enabled businesses, expert B2B services, and health and wellness companies.
‘The current market presents one of the most exciting opportunities of the last 20 years for growth investment, particularly given the scale and pace of digitalization,’ Alexis Saada, Head of Growth & Senior Managing Director at Ardian, said.
Following transactions in three French companies (dialysis solutions provider Théradial, food producer My Pie, and pharmacy chain Aprium Pharmacie), the fund is already close to 25% deployed.
Ardian recently reduced its minority stake in software provider Planisware to approximately 5% through its IPO in April. According to Bloomberg, the company’s shares jumped 33% on the Euronext Paris, making it the largest IPO in the last three years.
According to Preqin data, growth equity fundraising by Europe-based managers peaked in 2021, when 89 funds raised $24.4bn. Since then, fundraising has returned to pre-2021 levels, with 76 funds raising $15.1bn in 2022, and 52 raising $15.6bn in 2023. So far in 2024, 25 funds have raised $6.4bn.
Performance for growth funds lags buyout strategies but returns over the longer term have been strong. Horizon IRRs are lower over the one- and three-year horizon to September 2023, but are much closer over the 10-year timespan, at 15.5% for growth funds and 16.3% for buyout funds (see Fig. 1).
Fig. 1: Horizon IRR Growth vs. Buyout
While prospects for European economies are lackluster, with the European Commission forecasting GDP growth of 1.0% in 2024 and 1.6% in 2025 for EU countries, there will be plenty of higher growth opportunities in specific sectors and sub-sectors. With growth capital investments less reliant on debt and less affected by higher interest rates than buyouts, the strategy will continue to get attention from investors.
The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin providing the information in this content accepts no liability for any decisions taken in relation to the above.