Morphosis Capital's Second Fund Set to Energize Regional SMEs
Morphosis Capital Fund II Launches with Over 100 Million Euros
Morphosis Capital Partners BV, a renowned growth capital fund, is proud to announce the launch of Morphosis Capital Fund II. This exciting development comes with a committed capital exceeding 100 million euros, effectively doubling the investment size compared to its inaugural fund that raised around 50 million euros. The new fund is strategically designed to empower small and medium-sized enterprises (SMEs) in the region, primarily focusing on sectors such as healthcare, B2B services, consumer products and retail, alongside niche manufacturing.
The Vision Behind Fund II
Andrei Gemeneanu, the Managing Partner at Morphosis Capital, highlighted the vision behind Fund II stating, "Building on the success of our first fund, which resulted in six strategic acquisitions within high-growth sectors, the launch of our second fund represents a pivotal step in our growth strategy. With its upgraded size, Morphosis Capital Fund II provides us with the necessary resources to further aid entrepreneurial ventures across the region." He elaborated that by driving both organic growth and mergers and acquisitions, they aim to support companies in realizing their full potential and contribute to the evolution of the entrepreneurial ecosystem in Central and Eastern Europe.
Solid Foundations and Proven Success
The remarkable performance of the initial fund, which yielded an Internal Rate of Return (IRR) exceeding 30% through one full exit and two partial exits, lays a strong foundation for what Fund II aims to achieve. As the first fund progressively matures, Morphosis Capital is confident in identifying further beneficial exit opportunities that will not only solidify its position as a trusted associate for portfolio companies but also as a reliable partner for its investors.
Investment Strategy of Fund II
With aspirations of undertaking 9-10 investments, each offering an investment ticket ranging from 10 to 15 million euros, Morphosis Capital's strategy with Fund II contrasts significantly with its first fund, which executed six investments within the ticket size of 5 to 10 million euros. The new fund intends to primarily focus on businesses in Romania but will also explore opportunities in surrounding countries including Bulgaria, Croatia, Czechia, Poland, Slovakia, and Slovenia. Companies targeted will possess an EBITDA situated between 1 to 5 million euros, prioritizing majority stake acquisitions either independently or alongside co-investors. This marks a significant step for Morphosis Capital, as Fund I primarily concentrated on Romanian investments.
Strengthening the Team for Expansion
In pursuit of this new strategy, Morphosis Capital has expanded its team from 8 to 12 members, gearing up for the greater workload that comes with this ambitious endeavor. The escalation in fund size, alongside an increase in investment ticket sizes from Fund I to Fund II, reflects the outstanding performance and growing confidence among investors, further securing Morphosis Capital's status in the investment sector.
Pillars of Portfolio Selection
In selecting portfolio companies, Morphosis Capital emphasizes businesses that operate within expanding markets, particularly those that are fragmented yet ripe for growth through organic strategies or buy & build methods. The fund seeks companies demonstrating strong financial performance, an adaptable organizational culture, and promising prospects for mergers and acquisitions, thereby providing compelling exit pathways for its investors.
Recent Investments and Contributions
Fund II has made noteworthy strides already, with two significant investments. The first investment was in the Mark Twain International School (MTIS), recognized as the first private educational institution in the region offering a dual curriculum. The second investment was finalized with Supermarket La Cocos, a local retail success story. These initiatives underscore Morphosis Capital's commitment to nurturing viable and sustainable businesses across the landscape.
Support from Key Financial Institutions
Morphosis Capital Partners BV has gained backing from prominent bodies such as the National Recovery and Resilience Plan and the InvestEU Fund under the European Union, through a program administered by the European Investment Fund (EIF) meant to bolster investment funds. The EIF, previously an anchor investor in Morphosis Capital's first fund, continues to play a crucial role in advancing the growth of SMEs in Romania and beyond. Additionally, support has been secured from the European Bank for Reconstruction and Development and the International Finance Corporation, showcasing Morphosis Capital as the first private equity fund of its kind to recruit capital from all three major international financial institutions.
The fund has also established trust with various local and international family offices including Belgian-based Vybros Capital Partners and Inspire Asset Management, which has contributed towards further diversification of its investor pool.
In Summary
This operation enjoys financing from the European Union through NextGenerationEU, with foundational support from the Government to foster the Romania Recovery Equity Fund while being bolstered by the European Union via the InvestEU Fund. As Morphosis Capital continues to forge partnerships with promising businesses, its Fund II is poised to make a significant impact in the entrepreneurial landscape of Romania and the wider region.
Frequently Asked Questions
What is the primary goal of Morphosis Capital Fund II?
The main objective is to support the growth of SMEs in Romania and surrounding regions by making strategic investments in key sectors.
How does Fund II differ from the first fund?
Fund II has more than doubled the capital committed compared to the first fund, enhancing the potential ticket sizes and the number of investments.
Which sectors does Morphosis Capital target for its investments?
They primarily focus on sectors like healthcare, B2B services, consumer products and retail, and niche manufacturing.
What criteria does Morphosis Capital use to select companies for investment?
The fund seeks businesses with scaling potential, strong financial performance, and robust organizational culture, particularly in growing and fragmented markets.
What support has Morphosis Capital received from financial institutions?
It has garnered backing from important entities including the National Recovery and Resilience Plan, the EIF, and various international finance institutions to facilitate growth initiatives.
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