Target Information

SouthBridge Europe Mezzanine II SCA, SICAR, recently completed its first closing at €174 million, with a focus on investing in Greek small and medium-sized enterprises (SMEs). The fund, based in Luxembourg, is supported by prominent private and institutional investors, including the European Investment Fund (EIF), the European Bank for Reconstruction and Development (EBRD), and the Hellenic Development Bank of Investments (HDBI, formerly TANEO).

This new fund aims to build on the successful investment strategy of SouthBridge Europe Mezzanine Fund I, which demonstrated consistent high growth across its portfolio companies. Several notable investments include the HotelBrain Group, Alfa Dianomes / Inkat, Cosmos Yachting, and others. Significant transactions from SouthBridge I include the sale of the leading plant-based cheese producer, Arivia, to the multinational food company Upfield, and the partial divestment of Greece’s leading e-commerce platform, Skroutz, to CVC.

Industry Overview

The Greek SME sector plays a vital role in the country’s economy, accounting for a substantial portion of employment and overall output. The industry has been undergoing significant changes, especially in the wake of economic reforms and increased focus on innovation and sustainability. Greek SMEs are increasingly recognized for their capacity to adapt, innovate, and drive growth, making them attractive targets for private equity and venture capital.

Moreover, the organic products sector in Greece has witnessed impressive growth, driven by rising consumer demand for health-conscious and sustainable products. Retail chains specializing in organic products have expanded their presence, further indicating a shift in consumer behavior towards healthier options. Companies like Biologiko Chorio, which operates the largest organic retail chain in Greece, reflect this trend and underscore the potential for further growth in this niche industry.

The support from local and international investors is pivotal for the continued expansion of SMEs, particularly in sectors like organic retail, which require both capital and expertise to scale. Government backing from entities such as the Hellenic Development Bank of Investments has also fostered a more conducive environment for investments in innovative businesses.

Additionally, the alignment of Greek SMEs with sustainable practices positions them favorably, as there is an increasing global emphasis on responsible investing. This alignment can lead to the development of competitive advantages that support long-term growth and resilience against market fluctuations.

Rationale Behind the Deal

The rationale for establishing SouthBridge II is rooted in the goal of further nurturing and developing the promising landscape of Greek SMEs. By investing both capital and expertise, the fund aims to support entrepreneurs in their growth endeavors. As the demand for organic products continues to rise, the strategic investment in companies like Biologiko Chorio demonstrates a commitment to enhancing the value of the fund’s portfolio through sustainable and innovative business models.

Additionally, the considerable growth of Biologiko Chorio, evidenced by a 40% revenue increase in 2020, highlights the potential for lucrative returns within the sector. This deal exemplifies SouthBridge’s dedication to both financial success and the promotion of sustainability in the Greek market.

Information About the Investor

SouthBridge Advisors AIFM is a recognized investment management firm with a focus on private equity and mezzanine funding in Europe, particularly in Greece. The firm is committed to fostering growth in SMEs and has established a reputation for its successful investment initiatives.

With a strategic approach to investment, SouthBridge Advisors seeks to identify high-potential companies that stand to benefit from additional capital and operational expertise. The firm’s backing from reputable institutions such as the EIF and EBRD provides a robust foundation for its investments, enhancing credibility and attracting further interest from institutional investors.

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The establishment of SouthBridge Europe Mezzanine II SCA represents a promising investment opportunity within the growing landscape of Greek SMEs, particularly in the organic products sector. Given the momentum of consumer demand and the successful track record of SouthBridge I, this fund is well-positioned to capitalize on untapped potential and secure high returns.

Expert opinion suggests that the focus on supporting companies like Biologiko Chorio is not only a strong financial move but also aligns with the broader trend towards sustainability. The organic sector's growth trajectory, especially amid increasing health consciousness among consumers, provides a substantial base for future profitability.

Moreover, the support from leading investors underscores the confidence in the fund's strategy and the management team's capability to effectively drive value creation. As renowned investors join forces, the credibility of the fund is enhanced, which could lead to more significant investment opportunities and partnerships.

In conclusion, SouthBridge II's focus on sustainable investments through its support of strong local businesses positions it as a competitive player in the funding landscape. If managed well, this fund has the potential not only to yield impressive returns but also to contribute positively to the Greek economy and the broader market for organic products.

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