Charlesbank raises overage fund alongside flagship

Charlesbank Capital Partners is raising an overage vehicle alongside its latest flagship fund, according to documents from Rhode Island State Treasury.

The overage vehicle, whose target is not clear, will invest alongside the firm’s latest flagship, which is targeting $3.25 billion, as Buyouts reported. It has a $3.75 billion hard-cap.

The overage fund will come into play when the flagship fund wants to invest in companies that require equity investments greater than $300 million, according to a memo from Cliffwater, Rhode Island’s consultant.

According to a press release on the firm’s website, its previous flagship also had an overage vehicle. Fund IX closed on $2.75 billion in 2017. Its overage vehicle targeted $700 million, according to WSJ Pro Private Equity. 

The flagship will make control-oriented investments in mid-market companies in the business services, consumer, industrial, healthcare and technology sectors. It is charging the industry standard 2 percent management fee, 20 percent carry and 8 percent hurdle. It will make between 15 and 20 investments in companies with enterprise values between $150 million and $3 billion.

The overage fund will charge carried interest but no management fee.

Charlesbank was formed in 1998 by five veterans of Harvard Management Company‘s private equity group. Two of the founders, Michael Eisenson and Kim Davis, will be involved in Fund X as co-chairmen. Michael Choe is the chief executive officer. The firm has $7.4 billion in assets under management.

Charlesbank did not respond to a request for comment for this story.

Action Item: Read the Rhode Island staff memo on Charlesbank’s overage fund here and the Cliffwater memo here.