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Lion Capital plans swift return to market with €2bn fund cap

The Hicks Muse spin-out is set to double its firepower compared to its debut fund, which is almost fully committed just 16 months after closing.

Lion Capital, a European buyout group focusing on consumer brands, has told its investors it is preparing to raise up to €2bn for its second fund since winning independence from US firm Hicks Muse in early 2005.

The target on the cover of the private placement memorandum will be €1.5 billion, but to accommodate the anticpated extra demand, the fund will have a hard cap of €2 billion, more than double Lion’s first fund, which closed in June 2005.

Lea: declined to comment

At its annual general meeting for investors, Lion Capital, headed by Lyndon Lea, said its existing €820 million fund was 80 percent deployed. The firm has in fact put to work more than €1 billion in equity, including capital committed by investors in co-investments.

An investor told PEO Lion Capital’s first fund had already returned 36 percent of committed capital through Weetabix, a breakfast cereal manufacturer, which Lion has recapitalised twice, and from a single recapitalisation of Jimmy Choo, a premium shoe brand.

He said the new fund’s size would allow the team to continue investing in three or four deals a year. It would also mean the fundraising would not be a “broad-based” placement, focusing instead on existing relationships.

Lyndon Lea spun Lion Capital out of Hicks Muse Tate & Furst, whose London office he founded in 1998. Since gaining its independence, Lion has focused on branded consumer businesses in Europe, though it enjoyed its first US success this summer with the acquisition of American Safety Razor, a private label manufacturer of razors.

Lea’s team includes two founding partners Neil Richardson, who joined from Kohlberg Kravis Roberts, and Robert Darwent, who came with Lea from Hicks, Muse, Tate & Furst. 

Two senior appointments made in the early months following the spin-out underlined the focus on consumer brands. Javier Ferrán, joined after 20 years at Bacardi Group, the drinks manufacturer, where he was president and chief executive of Bacardi in Europe, the Middle East and Africa.

George Sewell joined after 32 years at Quaker Oats, the cereal maker. He became president of Quaker European Foods in 1995, a position he held until 2004.

According to the investor, Lion is building the firm’s infrastructure ahead of the fundraising with four junior hires, to take the number of associates to 10.

Lion Capital declined to comment.