The path for first-time managers in today’s market is fraught with pitfalls as even those with compelling stories may be hindered by an inability to meet prospective investors in-person.
But a select few new funds are attracting capital from limited partners who have mostly stuck with existing relationships through the pandemic lockdown.
One such firm is Avance Investment Management, formed by a group of executives who left Palladium Equity last year. The firm has collected about $425 million for a first close on its debut fund, targeting $500 million, according to sources and a Form D fundraising document.
Avance will be eyeing its $850 million hard cap, which, if achieved, would make the fund one of the more successful debut pools in the industry.
The firm is led by managing partners David Perez and Luis Zaldivar, who were senior executives at Palladium Equity. Park Hill Group is working as placement agent on the fundraising. Perez declined to comment about the fundraising.
Avance has not yet deployed capital. It focuses on the services and consumer sectors, looking for lower mid-market companies with $5 million to $25 million EBITDA, strong management teams and favorable cash-flow dynamics.
Avance will target buy-and-build M&A in founder-owned businesses. Services could include healthcare, insurance and financial, human capital management, environment, health and safety, supply chain and logistics, IT & data and property management.
Consumer could include food products and ingredients, residential products, fitness, health and wellness, auto and marine after-market and e-commerce, among other things.
Perez, formerly president and COO of Palladium, and Zaldivar worked at the firm from 2003 to last year. Other executives at Avance include partners Erik Scott, who worked at Palladium from 2005 until last year; and Gretchen Perkins, who worked at Huron Capital from May 2008 to last year.
Other first-timers in the market include Crosspoint Capital, formed by veteran tech CEO Greg Clark, which is heading for its $1.2 billion hard cap; ex-KKR healthcare chief Jim Momtazee’s new shop, Patient Square Capital, which could raise $3 billion for what would be one of the largest debuts in private equity; and Seaside Equity Partners, which closed its debut fund on $160 million for investments in lower mid-market companies in the western and southwestern US.