The government of Quebec and the National Bank are joining forces to launch a new $300 million fund aimed at supporting entrepreneurs at the head of medium-sized companies.
Quebec is releasing 45 million for this fund called Norea Capital II.
The limited partnership Investissements Groupe Familles d’Affaires – a grouping of six large industrial families – is participating to the tune of more than 100 million, while private investors and the National Bank complete the investment.
This fund aims to enable entrepreneurs operating medium-sized private companies (turnover from 25 million to a few hundred million) across the country working in all sectors of the economy to carry out their succession and growth projects. and acquisition, digital transformation and energy transition.
The supported businesses will benefit from the support of a group of investors who, it is said, are also successful entrepreneurs. In other words, it is an opportunity to have access to business networks and expertise.
The president and managing partner of Norea Capital, Luc Ménard, says he is already in discussions with around fifty companies and that the first investment from the Norea Capital II fund should materialize in the coming months. “We intend to invest in three or four companies per year for the next four or five years. We are talking about a portfolio which will contain 12 to 15 companies in promising sectors. »
Investments should generally amount to around fifteen million to $40 million. Some investments could be larger.
The objective is to generate returns of more than 15% per year for investors year after year. “Typically in private placements, we always talk about 15 to 20% targeted returns. The investment horizon is long term,” says Luc Ménard.
“Private placement is an interesting asset class from a yield point of view, but it is less liquid than other asset classes,” he adds.
Luc Ménard specifies that the fund allows investors of different sizes to access the private placement asset category, often reserved for institutional investors.
Norea Capital, a spin-off of National Bank, is a new private placement manager into which the former team of National Bank Placements Privés employees have been transferred.
These managers were also given responsibility for the National Bank SME Growth Fund, renamed the Norea Capital I Fund. This 200 million fund was set up in 2020 in the context of the pandemic, also in partnership with Quebec.
The decision to make the management of these funds independent was taken “because doing private placement within a financial institution with a federal charter can be complex and restrictive in terms of compliance,” says Luc Ménard.
“We are maintaining a partnership with the National Bank which remains an investor at the table, but the new structure allows us to consider investments in companies in which it was impossible to invest in the past. »
The Norea Capital II fund remains open to welcome new investors until June 22.