#Romania #Fund II #Bucharest #Morphosis Capital

Morphosis Capital Launches Fund II with Over 100 Million Euros in Committed Capital

Morphosis Capital Partners BV has officially announced the launch of its second investment fund, Morphosis Capital Fund II, which boasts a remarkable committed capital of over 100 million euros. This figure is a significant leap from the 50 million euros allocated for the first fund, underscoring the escalated confidence in the growth potential of small and medium-sized enterprises (SMEs) in Romania and its neighboring countries.

Purpose and Strategy of Fund II

The primary goal of Morphosis Capital Fund II is to facilitate and stimulate the growth of SMEs in key sectors, such as healthcare, business-to-business services, consumer goods, retail, and niche manufacturing. The team's approach has been shaped by prior successes, which included six strategic acquisitions achieved through their first fund. Andrei Gemeneanu, Managing Partner at Morphosis, articulated that Fund II represents a pivotal advancement in their growth strategy, designed to empower entrepreneurial ventures across Romania and beyond.

With intentions to complete 9 to 10 investments, the fund is looking at targeted acquisitions each valued between 10 to 15 million euros. Compared to Fund I, which executed six investments at approximately 5 to 10 million euros each, this marks a clear evolution in strategy and capability.

Regional Expansion and Growth Potential

Notably, Morphosis Capital is expanding its strategy beyond Romania to include Bulgarian, Croatian, Czech, Polish, Slovakian, and Slovenian markets. This is a significant shift, as Fund I was exclusively focused on ventures within Romania. The investment strategy prioritizes companies boasting an EBITDA range of 1 to 5 million euros with an emphasis on obtaining majority ownership, either independently or through collaborative investments with co-investors.

The increased scale of Fund II not only reflects strong investor support but also the solid performance of the inaugural fund, which reported an IRR exceeding 30% backed by a full exit and two part exits. This strong backing signals Morphosis Capital as a trustworthy partner, fostering growth and innovation in Eastern and Central Europe’s entrepreneurial ecosystem.

Building a Robust Portfolio

In its initial strides, Fund II has already made two notable investments, the first being in the Mark Twain International School (MTIS), which is Romania's leading private institution offering a dual curriculum. The second investment was recently completed in La Cocos, a local supermarket, extending their footprint in the retail market.

To facilitate these ambitious goals, Morphosis Capital expanded its team from 8 to 12 members in 2024, strengthening its capacity to manage increased fund size and to implement its innovative strategies effectively. The scale-up of both the fund volume and ticket size for Fund II illustrates the growing confidence of investors and the fund manager's solid standing as a key player in the venture capital domain.

Financial Backing and Future Prospects

Morphosis Capital is not only striving to enhance the Romanian market but also aligning its operations with broader EU initiatives aimed at aiding SMEs. The fund is backed by the National Recovery and Resilience Plan and the InvestEU Fund from the European Union, which is tailored to support investment funds. The strong backing from significant international institutions such as the European Bank for Reconstruction and Development and the International Finance Corporation further cements Morphosis Capital's status as the first private equity fund with a Romanian focus to secure investment from all three major international financial institutions.

Moreover, the fund has garnered trust from various local and international family offices such as Vybros Capital Partners and Inspire Asset Management, diversifying its investor base and securing resources for its growth plans.

As Morphosis Capital embarks on this next chapter with Fund II, the firm is committed to identifying and collaborating with innovative companies, further driving the advancement of SMEs in Romania and across the region as a whole.