PAI Shifts Focus to Listed Mid-Caps

PAI Partners, one of France's largest buyout firms, has turned its attention to listed mid-cap companies, according to chairman and chief executive officer Dominique Megret.

“We can invest in excess of EUR 1bn in equity just from our latest fund and not taking into account potential co-investments by our investors keen to invest alongside PAI Partners,” Megret said in an interview.

Megret said that listed mid-cap companies had comparatively low valuations due to institutional investors increasingly turning to highly liquid stocks that can be sold at short notice. “Large caps are still at levels which are relatively high, while some smaller ccaps have seen their market price decrease,” said Megret.

PAI Partners raised EUR 5.4bn (US$8.45bn) for its fifth buyout earlier this month.

Megret's comments highlight the lack of buyout activity below EUR 1bn in France currently. Of the 20 largest buyouts in Europe in the first quarter of 2008, only three involved French targets and the largest was the EUR 1.1bn secondary buyout of cable businesses Numericable and Completel, financing for which took several months.

The next largest equity-backed buyouts were a Mercapital-led consortium's EUR 550m acquisition of furniture and electrical business BUT and Hellman & Friedman's EUR 310m deal for Gaztransport & Technigaz (GTT). None of the top three deals involved French investors.

PAI Partners managed approximately EUR 10bn of exits in 2007, which gives some indication of the significantly larger arena in which it has operated over the last several years.

Past investments (now realised) include water and sanitation business Saur, sold to a consortium of investors including Caisse des D