Growth capital fund Morphosis Capital Partners announced the launch of Morphosis Capital Fund II, its second investment fund, with a committed capital of over €100 million.
This is double the size of its first fund commitment (previously around 50 million euros). And this new fund aims to support the growth of SMEs in Romania and the region, in key sectors like healthcare, B2B services, consumer products and retail, and niche manufacturing.
Morphosis Capital aims to make 9-10 investments through the second fund, each with an investment ticket ranging from €10-15 million euros. And for comparison, its first fund realized 6 investments with ticket size range between €5-10 million euros.
Fund II’s strategy primarily focuses on companies in Romania, but it will also target other countries in the region, such as Bulgaria, Croatia, Czechia, Poland, Slovakia, and Slovenia. And the fund will target companies with an EBITDA between €1-5 million euros, prioritizing majority stake acquisitions, either independently or alongside co-investors.
This is the first time that Morphosis Capital pursues a regional expansion strategy with Fund I having solely targeted investments in Romania. And additional recruitment efforts were made to enact this new strategy with an increase in team size from 8 to 12 members in 2024. This nearly doubled fund size and ticket size from Fund I to Fund II reflect the solid performance of Fund I, which has significantly increased investor commitments and confidence, further establishing the fund manager as a leading player in the sector.
For selecting portfolio companies, Morphosis Capital targets businesses operating in growing markets within fragmented industries with scaling potential through organic growth or buy-and-build strategies. The fund also prioritizes companies with strong financial performance, robust organizational culture, and prospects for mergers and acquisitions, offering investors exit opportunities.
Morphosis Capital Fund II already made two investments: the first being in Mark Twain International School (MTIS – the first private educational institution in Romania with a dual curriculum. And the second investment was recently closed with Supermarket La Cocos, a local retailer, in December 2024.
Morphosis Capital Partners was co-financed through the National Recovery and Resilience Plan and the InvestEU Fund of the European Union via an initiative managed by the European Investment Fund to support investment funds. And the EIF, which served as the anchor investor in Morphosis Capital’s first fund, continues to play a significant role in fostering the growth of SMEs in Romania and the wider region.
Along with the EIF’s backing, Morphosis Capital has attracted capital from the European Bank for Reconstruction and Development and commitment from the International Finance Corporation. And this makes Morphosis Capital the first private equity fund with a majority focus on Romania to secure capital from all three major international finance institutions.
This fund also gained the trust of local and international family offices like Belgian-based Vybros Capital Partners and Inspire Asset Management, further diversifying its investor base.
This operation is funded by the European Union – NextGenerationEU with the financial backing of the Government of Romania under the Romania Recovery Equity Fund and benefits from the support of the European Union under the InvestEU Fund.
KEY QUOTE:
“Building on the success of our first fund, which saw us make six strategic acquisitions in high-growth sectors, the launch of our second fund represents a pivotal step in our growth strategy. With double the size, Morphosis Capital Fund II equips us with the resources needed to further support entrepreneurial companies across Romania and the region. By driving both organic growth and M&A strategies, we will help companies scale rapidly, enabling their full potential, driving the long-term development of the entrepreneurial ecosystem throughout Central and Eastern Europe. The success of our first fund, which generated an IRR of over 30% through one full exit and two partial exits, sets a solid foundation for Fund II. As our first fund matures, we are confident in identifying further profitable exit opportunities that will strengthen our position as a trusted partner to both our portfolio companies and investors, while continuing our mission of identifying and partnering with innovative businesses through Fund II.”
– Andrei Gemeneanu, Managing Partner at Morphosis Capital
