Advantage Capital raises $55M for Illinois deals

With former Illinois Sen. Barack Obama in the White House, the state is seeing something of a renaissance. And at least one investment firm is hoping to take advantage.

Advantage Capital Partners has closed its first fund dedicated to investing in Illinois, raising $55 million to invest in businesses that qualify for the Illinois New Markets Development program.

First Bank, Southwest Bank and U.S. Bancorp’s Community Development Corp. were investors in the fund, which benefits from a tax credit provided by the state.

The state legislature last year passed a $125 million stimulus program targeted at attracting large investors to help fund Illinois’ low-income communities. The New Markets Development programs mirrors a similar federal program, called New Markets Tax Credit, that offers tax credits to individuals and corporations making qualifying investments in the stae.“Our banking partners are feeling the pinch like anybody else,” says Advantage Capital Managing Director Louis Dubuque. “Capital is very scarce and for [the LPs] to invest in this fund makes us very thankful for the tax incentives program..”Dubuque says the firm is looking to hire one or two senior professionals to staff its Chicago-based office and help it to take advantage of the new program. He says that the firm may expand the office to five or six total professionals if the program does well.

In addition to Chicago, Advantage Capital has offices in New Orleans, St Louis, Austin, Texas, and other cities nationwide.

Advantage has had experience working with the federal New Markets Tax Credit program, the credits from which it has been able to leverage into $318 million worth of funds since 2003. The firm has previously raised a number of state-specific funds in this vein, targeting Missouri, Florida, Colorado, Hawaii, Texas, Alabama, Washington, D.C., and New York, according to regulatory documents.

“Though we’re a large shop, we’re made up of small funds,” Dubuque says. “These are smaller funds where people just don’t want to spend the time and effort.”

Advantage will invest in a range of deal types, offering both debt and equity to small companies.

However, the Illinois-focused fund will not look for technology startups, he says.

“We’ll be looking at traditional businesses, some nice, good old stuff like distributors and small manufacturers who need $1 million to $3 million in non-traditional capital,” he says. It’s a particularly attractive time to be putting money to work in this fashion, he adds, since bank lending is down, and these types of business would normally seek that type of capital structure.

Separately, Advantage garnered headlines recently when Managing Director Scott Murphy won a special election to replace Congresswoman Kirsten Gillibrand as a representative of New York’s 20th congressional district. Murphy replaced Gillibrand, who was appointed to the Senate to fill Hillary Clinton’s spot. Murphy now sits on the Committee on Agriculture and the Committee on Armed Services and introduced legislation in July that would extend legislation supporting certain earned income tax credits.