OFI’s Zencap lines up investors for fund targeting smaller mezzanine deals

French asset manager Zencap has launched a European mezzanine fund targeting €100m of equity.

Zencap, a subsidiary of the OFI asset management group, will hold a first closing at the end of the month.

A preliminary closing in July financed its first investment, an acquisition loan for the purchase of a small building on Donaustrasse in Berlin by a local operator. The fund’s strategy includes UK deals.

Blazsin, Victoire
Blazsin: “We tend to focus on loans up to €10m for smaller deals than many mezzanine players”

Among the dozen investors lined up are family offices, private banks and institutional investors; Zencap is aiming for returns of around 10%.

“We tend to focus on loans up to €10m for smaller deals than many mezzanine players and our target returns are lower than many of them, allowing us to consider different operators and propositions,” said Victoire Blazsin, Zencap’s co-deputy chief executive officer.

“For instance, the economics of many deals means they cannot survive an 18-20% mezzanine interest rate, but are still very sound and can provide an attractive risk/return profile for investors who can live with low to mid double-digit returns. That’s where we come in.”

OFI is controlled by insurers Macif and Matmut and manages €53.6bn of assets.

Zencap, launched as a separate unit in 2009 to focus on distressed or high-yielding debt, manages six specialised funds and one advisory mandate.

About two-thirds of its assets relate to real estate debt.