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Syntaxis raises EUR140m for second Central European mezzanine fund

Syntaxis Capital has completed the first close of its second Central European mezzanine fund with aggregated commitments of EUR140m, just over half its targeted amount.

SMF II follows on the firm’s maiden fund which reached final close at the end of 2008 collecting just under EUR120m in aggregate commitments and is now largely invested.

The European Bank for Reconstruction and Development, the anchor of the Syntaxis’s first fund, also anchored the second alongside the European Investment Fund. Other commitments were received from Fund I limited partners re-upping into Fund II, as well as from new investors.

Syntaxis Mezzanine Fund II’s investment strategy is to provide junior capital to mid-market private companies in the new European Union member states of Central Europe.

Ben Edwards (pictured), Syntaxis’s managing partner, says: “While Central Europe has certainly felt the impact of the financial crisis, over the investment period of the Fund (and beyond) convergence with Western Europe will remain the key driver of regional growth and again act as a magnet for inward investment. That less permanent equity and credit financing has left the region in the last year or so is no bad thing for our fund: good companies continue to need capital for expansion and acquisitions, and the buyout market will again be a key feature in our private equity landscape when senior debt underwritings resume. We are already seeing that leverage multiples and value-expectations have fallen dramatically, and with greater macro visibility, we believe that this will be an excellent time to be deploying our type of capital.”

The fund aims to provide capital alongside private equity funds in buyouts, as well as directly to growing companies in sponsor-less transactions, for acquisitions, expansion and recapitalisations. The fund will typically underwrite and subsequently hold to exit the entire mezzanine financing.

The typical investment size will range from EUR7.5m to EUR20m, but through active direct involvement with the fund’s existing and prospective limited partners, Syntaxis Capital expects that the fund will be able to structure junior capital investments in much larger amounts.

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