French private equity firm PAI Partners raised €7.1 billion ($7.6 billion) for its latest fund to invest in “real-economy” companies in Europe and North America, marking one of the larger European fundraisings this year.
PAI Partners VIII surpassed the firm’s target of €7 billion, and is about 40% larger than its predecessor fund, which raised €5.1 billion in 2018, according to a statement.
The new investment vehicle comes amid a tricky fundraising environment for buyout firms, with investors becoming pickier about where they allocate their cash. While some are flocking to multi-strategy asset managers, others are doubling down on specialized offerings.
Fund VIII garnered almost €2 billion of capital from new investors, with new commitments from North America and the Middle East, according to the statement. There was strong participation from existing investors as well, with several doubling their commitments on the prior fund.
“What has helped us is PAI’s differentiated approach in the real economy — we invest in traditional sectors where we identify strong market leadership opportunities,” Richard Howell, a managing partner at the firm, said in an interview.
PAI was also helped BY its “particular expertise in carve-outs from large corporates,” Howell said, citing the firm’s ventures with Nestle SA on its ice cream and European pizza businesses, and with PepsiCo Inc. on Tropicana Brands Group.
Food and consumer products has traditionally been PAI’s strongest area of deployment, making it attractive to investors looking to build diversified portfolios.
About 35% of PAI’s latest fund has already been invested, including in pet food maker Alphia, accountants and business advisory firm Azets Group and leisure parks operator Looping Group, among others.
The PAI fund is the third-largest raised by a European buyout firm this year, behind CVC Capital Partners’ record €26 billion vehicle and Permira’s €16.7 billion fund.
“We are optimistic about the deal environment going into next year - we have a strong pipeline and we are deploying steadily,” Howell said, adding that larger deals are becoming possible and credit markets are opening up.