Sanpaolo IMI, BayerLB and Eulia, the French banking joint venture set up late last year, are to launch a European private equity fund that will work on leveraged buy-out transactions, raising hopes of a revival in the leveraged finance market.

The €300m ($297.2m) to €500m fund will initially focus primarily on investments to small and mid-cap companies in Italy, France and Germany, the domestic markets of the three collaborating banks.