A bespoke partner for SMEs, Initiative & Finance has been supporting entrepreneurs with their projects for thirty-five years and is a major player in private equity in France. Jean-Bernard Meurisse, president of the fund, takes a look at its defining traits, its history, its values, its successes from 2019 and its plans for 2020.
What are the key points we should know about the history of Initiative & Finance?
We came into being in 1984, when the private equity market for SME buyouts was emerging in France. However, if I had to give a key foundational date for Initiative & Finance as it is today, it would be 2010. That year, Natixis – one of the financial institutions that founded Initiative & Finance, and the reference shareholder for over 20 years – gave us the opportunity to go independent, by selling the management company to the five managing partners, most of whom arrived in 2002, and selling its equity portfolio to Axa Private Equity funds (now Ardian). In late 2010, to finance its investment projects, Initiative & Finance held a first fundraising round worth €140 million, which was invested over the period 2011-2015. In late 2015, a second fund worth €165 million was raised. That was invested over the period 2016-2019.
What are your missions and values ?
Our priority is to support company executives with their shareholding projects (takeover, buyout, acquisition, growth, etc.), while helping to give their company solid strategic and structural fundamentals. As a result, each company becomes more robust, led by executives who are better prepared to tackle the future and seize all growth opportunities. Those are essential conditions for carrying out our other missions: both for our clients, to help guarantee sustained high-quality performance, and for our teams, who we offer experience and opportunities to progress. Initiative & Finance unites these stakeholders around strong values such as loyalty, conviction, simplicity and a collective approach.
What sets you apart in the investment fund world ?
Durability and SME culture are our fundamental pillars. Durability is about the strength of our small-cap positioning, which we have adopted for more than thirty-five years and are progressively opening up to middle-market firms. It is also about the consistency of our performance and the stability of our team. SME culture can be seen in our own unique path as passionate entrepreneurs who chose to go independent; in the agility of our approaches (an SME serving SMEs and respecting their uniqueness); and in the priority we give to human relationships in our day-to-day dealings with our partner executives. Finally, it can be seen in the boldness of our choices: our ability to take risks and commit.
What do all companies you support have in common ?
All of them are led by a high-quality management team. In the vast majority of cases, Initiative & Finance takes an equity stake in partnership with an executive or management team that is already in place and wants to continue the adventure. Despite differences in their situation, maturity, managerial setup and business sector, all the companies we invest in share some common traits: they are profitable, growing, and have ambitious development projects that will fuel their growth.
In your view, which partner SME symbolizes the commitment of your teams and the success of your work ?
There are a lot! But Moustache Bikes, whose young management team, passionate about their project, received substantial support from us, perfectly illustrates the commitment inherent in our SME culture. Our experience as a professional investor was vital throughout their remarkable journey, during which they were confronted with the challenges of hyper-growth and had to face decisive stages of development for their future. Our backing proved a great success and made it possible to structure and transform a successful SME into a middle-market firm with a long future.
2019 was an exceptional year for Initiative & Finance. Why was that ?
In 2019, Initiative & Finance made record investments, with €64 million invested in 7 new deals. Because of this, we had to bring forward our third fundraising round, raising €200 million of third-party money in a very short period and with only one closing. At the same time, we supported portfolio companies in twice as many add-on acquisitions as in previous years. We also completed some major sales. Overall, in a single year, we generated profits greater than the size of an entire fund, which would normally be invested over five years… That performance won us plaudits in the profession: Initiative & Finance won the Gold Award 2019 in the Best French Small & Lower Mid-Market LBO Fund category at the Private Equity Exchange & Awards, an event that brings together the whole of the French and European investment world.
On top of that, we redesigned our visual identity and overhauled our communication tools.
How is 2020 looking ?
Promising and active: after a decade of independence, Initiative & Finance is opening a new chapter in its history, with a new mid-cap/middle-market strategy in keeping with our existing know-how, having helped many SMEs become middle-market firms. A strategy targeting companies in all sectors that take the environmental transition and sustainable development into account in their business model. It will be driven by a dedicated team led by Baudouin d’Hérouville, former Managing Director of Ardian Expansion, who recently joined Initiative & Finance to tackle this new challenge through the soon-to-be-created “Tomorrow Private Equity Fund”.