Cove Hill, led by Bain Capital veteran Andrew Balson, closes Fund II at $1.5bn

The Boston private equity firm raised Cove Hill Partners Fund II and a parallel vehicle at a fast clip during the health crisis, a source told Buyouts.

Cove Hill Partners wrapped up fundraising for a second long-term consumer- and tech-focused offering, securing about $1.5 billion, a person with knowledge of the matter told Buyouts.

Surprisingly, the Boston private equity firm raised Cove Hill Partners Fund II and a parallel vehicle at a fast clip during the health crisis. Marketing officially began in the late spring, the person said, well after the outbreak of the covid-19 pandemic.

Fund II is roughly 50 percent larger than its predecessor. Cove Hill’s inaugural fund closed three years ago at $1 billion-plus, ahead of an initial target of $850 million.

Cove Hill was launched in 2017 by managing partner Andrew Balson, a veteran of Bain Capital. Balson worked for Bain for 17 years, the last 13 of them as a managing director.

Balson co-led Bain’s global PE investment committee process over 2011-13, and its investing in tech, media and telecom and select consumer sectors over 2010-13, according to Cove Hill’s website. He participated in 11 investments in all and sat on the boards of companies like Domino’s Pizza and Dunkin’ Brands.

Balson brought these investment themes to Cove Hill. The firm was set up to make control and significant minority investments in North American businesses operating in the consumer products and services and tech and tech- enabled services industries.

A key aspect of the strategy is a long-duration focus. Fund I has a 15-year life, plus extensions. It also has an evergreen provision that allows portfolio companies to be held indefinitely. Cove Hill is cautious about doing deals, making one or two investments per year, with an emphasis on building a concentrated portfolio.

In 2017, Balson told Buyouts he had been involved with “many businesses that continue to prosper and grow over really long periods of time,” especially with the support of a value-adding investor. Fund I, he said, was structured to “hold these special companies for as long as we believe the risk-return is attractive.”

Cove Hill’s investor base, made up of charitable foundations, family offices and university endowments, is aligned with this long-term objective.

Cove Hill has greatly enlarged its team since 2017, including increasing managing directors to four from one. Senior hires include Zack Kaplan, who joined in 2018 from General Atlantic, and Yvonne Hao, a former Bain Capital operating partner who came on board last year. Kaplan co-leads the consumer team, while Hao co-leads the portfolio group.

Another managing director, Justin Roberts, was part of the original contingent. Joining from General Catalyst Partners, he co-leads the tech team.

Cove Hill has five active portfolio companies disclosed on its site. Among them is Kalkomey, a Dallas provider of online recreational safety education to government agencies and outdoor enthusiasts. It was acquired earlier in 2020 from Inverness Graham.

Other investments include LiveAuctioneers, a New York online live-auction platform for collectibles, antiques, jewelry and art. Cove Hill acquired the business last year.

Cove Hill declined to provide comment on this story.

(This story was updated from an earlier version to include new information provided to Buyouts about Fund II’s final close.)

Action item: See Cove Hill Partners’ ADV filings here.