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"Mezzanis" is Crédit Agricole Private Equity's activity that specialises in mezzanine
financing.
With proven experience and recognition gained through its advice on a first mezzanine
fund launched in June 2002 that was fully invested in only three years (EUR87
million invested in 15 deals), the Mezzanis team is today a key player on the
French mezzanine (middle market). It is launching an FCPR which plans to reach
EUR150 million.
Mezzanine financing: a customised financing solution midway between debt and
equity
Intermediate or mezzanine financing provides a customised solution to financing
requirements that cannot be fully met by conventional pure debt or equity products.
In the face of a highly standardised structured debt market, and the concomitant
restrictions on loan terms and gearing levels, on the one hand, and the high returns
demanded by equity investors, on the other, mezzanine financing offers flexible
hybrid solutions that allow transactions to be carried out under satisfactory
terms for all parties involved.
Mezzanine financing is mainly used in leveraged buyouts (LBOs/LBMOs or LBUs)
carried out by financial investment funds or industrial players (corporate acquisitions).
It can however also be used to provide financing for internal or external growth,
to strengthen shareholders' equity ahead of an IPO, or to restructure a company's
capital in preparation for a change in the shareholder structure or a buyout.
Midway between debt and equity, mezzanine financing often has a quasi-equity
status, particularly relative to other senior debt. This is why investors providing
mezzanine financing see their investment as a medium/long-term partnership with
the management and shareholders of the financed company, and derive part of their
remuneration from the additional value created by their investment.
A European middle-market focus
Mezzanis invests mainly in unlisted companies with strong potential. It focuses
on mid-sized euro-zone companies in any sector, with enterprise values ranging
from EUR30 million to EUR500 million.
Its investments generally take the form of subordinated bonds with share warrants
(OBSAs), with maturities of up to 10 years, redeemable at maturity. This type
of investment is usually remunerated in the form of regularly paid interest, capitalised
interest at maturity and a capital gain paid on the sale of the shares acquired
by exercising bonds with share warrants. Mezzanis' investment may however also
take other forms such as shares, convertible bonds or bonds mandatorily redeemable
in new shares (ORAs), subject to certain remuneration and liquidity conditions.
Each individual investment by Mezzanis will ideally be in the EUR10 million to
15 million range (minimum EUR5 million), though Mezzanis, acting alone or in partnership
with other investors, may also invest larger amounts for subsequent syndication.
A team with wide-ranging, multi-disciplinary skills
Mezzanis mainly acts as an arranger or co-arranger of deals. It has a highly
experienced team with experience in financial transactions and LBOs.
- structured financing, especially the senior and mezzanine financing of
leveraged buyouts,
- company valuations, financial engineering in respect of long-term financing
deals, stock market transactions, M&A,
- investment (majority or minority stakes) in unlisted companies, public
to private transactions,
- strategic support for management.
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