Enlightenment Capital targets $600m for next flagship

LPs may look to smaller, niche funds as a way to boost returns while diversifying their portfolios.

Enlightenment Capital is seeking $600 million for its latest flagship fund for investments across government services, aerospace, defense and technology.

Smaller, niche managers may find success in the current fundraising environment as investors seek diversification along with strong performance.

Details about Enlightenment Capital Solutions Fund V were included in a presentation at Arkansas Teacher Retirement System’s April 15 investment committee meeting. Buyouts watched a broadcast of the meeting.

Arkansas Teacher committed $35 million to Fund V. Houston Police Officers’ Pension System is also considering a commitment to the fund at its next investment committee meeting, according to its latest agenda.

Fund V has a $600 million target with a $750 million hard cap, according to a presentation from Arkansas Teacher consultant Franklin Park. Fund IV closed in 2022 after raising $540 million.

Recent fund performance

  • Fund IV (2021 vintage) IRR: 69.5%
  • Fund III (2018 vintage) IRR: 38.6%
  • Fund II (2015 vintage) IRR: 38.6%
  • Fund I (2012 vintage) IRR: 26.0%

Source: Arkansas Teacher Retirement System as of September 30, 2023.

Franklin Park said Enlightenment Capital’s expertise in the aerospace, defense, government and technology sectors grants it an advantage over generalist funds that may also invest in this space.

“The team is highly knowledgeable about the forces shaping its target segments, industry cycles and valuations, the value drivers that determine investment potential, what constitutes best operating procedures and how performance can be improved through management initiatives,” Franklin Park wrote.

Enlightenment Capital’s offerings combine features of both private equity and private debt funds, according to Franklin Park.

“This combination of debt and equity limits the downside but doesn’t limit your upside,” said Michael Bacine, a managing director at Franklin Park.

According to Franklin Park, Enlightenment Capital’s investments typically have little or no senior debt ahead of its positions in capital structure.

Fund V will be split evenly between controlled and non-controlled investments, according to Franklin Park.

One challenge facing Enlightenment Capital is its relatively concentrated deal team, led by founder and managing partner Devin Talbott and partner Jason Rigoli.

To rectify the situation, Enlightenment Capital has boosted its mid-level and junior investment team in recent years to mitigate capacity concerns, according to Franklin Park.

“Further, there are several expected exits in 2024 from the existing portfolio, which will free up some capacity on the team,” Franklin Park wrote.

The manager’s portfolio companies include federal agency software platform Summit Technology Group, cybersecurity specialist RealmOne and Aurora, a recently rebranded company that supports space operations.

According to a source, Enlightenment is working with Metric Point Capital as a placement agent to assist with fundraising.

Enlightenment Capital did not return a request seeking comment by press time.