Syntaxis holds first close on debut mezz fund

Syntaxis Capital has held a first close on its debut fund, which is targeting €125 million ($173 million) for mezzanine investments in central and eastern Europe.

The mezzanine specialist, which was founded last year by three former executives of Mezzanine Management, has held a first close after raising “just under half” of its €125 million target, according to managing partner Ben Edwards.

Shortly after launch, the firm entered into a strategic alliance with Indigo Capital, a pan-European mezzanine player which has just closed a €550 million fund. The deal involved Indigo taking a minority stake in Syntaxis’s management company, although it will not be a limited partner in the fund. The two firms will work together on developing deals, and may invest alongside each other in larger transactions. “We think alike and will have a similar footprint,” Edwards said.

The fund has attracted commitments from a “predominantly European” investor base, according to Edwards. Limited partners include the European Bank for Reconstruction and Development, which has agreed to commit up to €25 million, German fund of funds Themis Equity Partners and UniCredit bank, along with US insurer MassMutual.

Syntaxis will typically invest between €5 million and €15 million per deal, although Edwards said the firm was seeing lots of appetite for co-investment among its limited partners, which would allow it to invest “in much larger amounts”. Most of these investments will be in sponsor-backed leveraged buyouts, although sponsorless deals – providing expansion capital to companies that are not private equity backed – will be a “meaningful part of what we do”, Edwards said.

The firm’s principals have previously worked with most of the big buyout players in the region, including Mid Europa Partners, AIG, and Advent International.

Edwards said mezzanine looked a very attractive investment in the light of the recent jitters in the credit markets. “It’s times like these when the added value of a dedicated mezzanine player really comes to the fore. It highlights the value of the buy-to-hold mezzanine investor who’ll go in and stay there – who’ll be a true partner rather than just a capital provider,” he said.

Before launching Syntaxis, Edwards was the co-head of Mezzanine Management’s central European fund, Accession Mezzanine Capital, having joined Mezzanine shortly after its formation in 1999. Co-founders Przemek Szczepanski and Thomas Spring were also at Accession.