Quadrivio plans first close for EUR 500m Lifestyle Fund II by mid-2023

Italian consumer sector-focused private equity firm Quadrivio Group is set to hold a first close for its second lifestyle fund against a EUR 500m target by May or June, co-founding partner and CEO Walter Ricciotti told Unquote.

Having registered Lifestyle Fund II in Luxembourg in February 2023, the GP has now started officially fundraising for the new vehicle.

As more than half of Quadrivio's limited partners (LPs) have traditionally been pension funds - which tend to commit capital based on "allocation windows" across their several strategies - it is difficult to predict the amount that will be committed to the fund on its first dose, said Ricciotti. "lt will depend on the timing of their PE allocations and whether that will coincide with the first dose," he added.

In addition to pension funds, it has also historically counted foundations, banks, insurance companies and family offices among its LPs.

The number of international investors in the new fund is expected to be bigger. While the firm's LPs base has been predominantly ltalian, Quadrivio aims to increase its international subscriptions to comprise half of the latest fund's totaI commitments, said Ricciotti. To date, LPs from beyond ltaly have so far accounted for one-third of its investor base, he added.

Beyond ltaly

The sponsor is also branching out internationally in terms of the companies that it will acquire. Although ltalian companies will continue to constitute a significant part of the new fund's portfolio, which will also include businesses based in other European countries, potentially in Spain, France, and the UK, he added.

Although Lifestyle Fund II is the successor vehicle of the GP's 2021-vintage, EUR 300m Made in ltaly fund, the name of the new fund was chosen to reflect this change in geographic focus, Ricciotti said. The strategy will nonetheless continue to invest in SMEs operating in the fashion, design, beauty and food industries, he added.

The firm has three investments in its pipeline, which it aims to sign before the summer, Ricciotti said. These include deals in the fashion, wine and food, and design spaces respectively, with two of the targets based in ltaly and one in France, he said.

While its predecessor completed 11 platform investments in companies with annual revenues of EUR 10m-EUR 50m by deploying equity tickets of EUR 25m on average, Lifestyle Fund Il will seek to make slightly fewer deals but with larger equity tickets of EUR 35m on average, he added.

The Made In ltaly fund is now fully invested, with EU R 50m reserved for follow-on investments across its portfolio, he said. The GP will allocate the total amount raised for its latest fund to new investments and it remains unclear so far whether capitai will be later reserved for follow-ons.

The Made In ltaly fund completed seven investments in fashion and accessories companies, including ltalian premium jeans label Dondup and luxury streetwear designer and retailer GCDS, plus two in food and wine businesses, namely wine producer Prosit and online wine distributor Xtrawine. It also invested in high end furniture marketplace Mohd and cosmetics manufacturer and distributor Rougj.

Consumer confidence

Ricciotti is confident in Quadrivio's investment strategy in spite of the fact that the consumer sector is currently experiencing headwinds.

The GP has been targeting international companies with strong positioning and a sufficient international spread of sales in the medium to high price range, which makes them more resilient to inflation and lower demand, he said.

With an exit environment positive for M&A but largely shut for IPOs, he said, Quadrivio plans to realise two of its Made In ltaly fund investments this year.

The sponsor is currently running a sale process for its portfolio company Autry via Mediobanca and JP Morgan, Mergermarket reported. Initial bids for the ltalian footwear producer are expected by the end of May. The sponsor did not respond to a request for comment.

The GP is also on the road fundraising for its Silver Economy Fund, which is expected to hold a final dose on its EUR 300m target by the end of the year, he said. lt was launched in April 2021 and will target companies based across Europe and North America, specialising in tailor-made products and services dedicated to people over 50. The vehicle focuses on companies with enterprise values of up to EUR 200m and deploys tickets in the EUR 20m-EUR 50m range, according to Unquote Data.

lts lndustry 4.0 fund held a final dose on EUR 200m in 2022, he said. lt will invest in 10-15 ltalian SMEs operating in the manufacturing industry by deploying equity tickets of around EUR 20m-EUR 30m.

Quadrivio is currently hiring for three positions to complement the investment team that is managing its latest Lifestyle Fund, as well as its predecessor vehicle, said Ricciotti.