A quest to build a sustainable business and make value-adding investments
It's my pleasure to extend a warm welcome our website visitors.
SIG-i Capital’s mission is to build a sustainable investment business that facilitates growth in real economy by providing financing in an informed and responsible manner to those companies that create positive social and economic value.
We see a substantial opportunity in the European junior debt market on the back of shrinking traditional financing landscape that has been taking place over the last few years. In addition to participating in the overall growth of the asset class, SIG-i positions itself in a more complex part of the market which calls for tailored financing instruments. This is where the firm could add most value to both investors and investees by applying its core competencies of innovative structuring and thorough due diligence.
At SIG-i, we strive to foster an environment in which our stakeholders - employees, fund manager's shareholders and fund investors - can make an impact. We hope you could join us on this quest.
Good time for our Fund II
With many major stock market indices recording the worst performance in decades – S&P 500 was down some 20% in 1H22, the worst performance of the US benchmark index since 1970 – many investors are worried about the prospects for the economy and the risk assets. This environment may well end up being an opportune time to launch our fund II.
We believe we have demonstrated with our first fund that we can generate alpha by sticking to our rigorous investment process starting from deal selection and due diligence through active management of the portfolio (including restructurings).
The environment of heightened risk perception and increasing interest rates rises the return to the beta – we see manifestations of this in our deal pipeline. In fund II we are looking to take advantage of the opportunities we expect to become available in the environment that promises to award greater return to risk by deploying our alpha-generating investment process over the investment horizon of the next three to four years.
Fund II Launch
SIG-i Capital is pleased to announce the launch of its second European mezzanine and special situations fund, SIG-i Euro Mezz II. The first close investors, comprising a Swiss pension fund, a group of family offices & high-net-worth individuals and SIG-i Capital’s founders, committed €50 million (plus an equivalent amount in co-investments) to the Fund.
Guided by the strong deal pipeline, the team expects to pursue deal opportunities exceeding the quantum of first close commitments over the next six months and intends to undergo a second closing in early 2023. In SIG-i Capital’s opinion, the fundamentals-focused and structuring-heavy investment strategy pursued by the firm is likely to be especially effective at tackling and leveraging market dislocations created by the current geopolitical and economic conditions.
The predecessor EUR200m fund, now closed for investments, has generated net mid-teens IRR in EUR terms and returned the majority of the capital to its investors. SIG-i makes infrequent investments devoting four to eight months to structuring and due diligence from start to closure of a transaction. In SIG-i’s view, a meaningful part of the return comes from the firm’s ability and willingness to engage in detailed due diligence and come up with innovative, investee-specific investment solutions. The six-year track record also demonstrates specific differentiating features of the strategy which targets equity-like returns with downside protection via security and other creditor rights. SIG-i Euro Mezz II will pursue the same investment strategy.
Junior debt with flexible terms
Moderate cash burden thanks to a combination of PIK and cash interest and possibility of bullet repayment at exit
Alignment of interests with shareholders through participation in equity upside
In most cases the instrument is subordinated to senior lenders in terms of security and priority of payments
Target mid-teen returns plus upside: more expensive than senior debt but cheaper than equity
Return comprises cash and PIK interest and upside participation
Participation in the economic value of the borrower may be structured in a variety of ways
The firm engages with companies that temporarily require extra financing (e.g. for working capital or capex) by being a patient growth enabler.
SIG-i provides capital to an operating company enabling it to buy out a large minority investor. SIG-i gains extra sourcing edge by proactively proposing its solutions in situations where the focus of the advisor is to find a buyer for a minority equity stake.
SIG-i partners up with a private equity sponsor that seeks to acquire a target company to provide junior debt (mezzanine) financing.
Your business has a proven competitive advantage and generates normalised EBITDA of at least EUR5m
Your business activities have a strong nexus to Europe
You are looking for EUR 10-40m of funding from a long-term partner
You value flexibility of financing terms and do not wish to dilute your shareholding
WHAT WE LIKE
Businesses with competitive advantage, strong management team and established operational track record
Well-incentivised and aligned shareholders
Substantial equity cushion at the time of the investment
Clear path to exit
WHAT WE SHY AWAY FROM
Companies with unquantifiable
Early stage companies with limited proof of concept
Absence of skin-in-the-game for the key stakeholders
Highly regulated industries
Real estate companies