Ex-Soundcore exec Zarotsky raising debut buy-and-build fund

Two Roads Capital, a spinout from emerging manager Soundcore Capital Partners, is in market with its debut fund targeting a buy-and-build strategy, according to sources and an SEC filing.

Former Soundcore senior partner Feliks Zarotsky left the firm over the past couple years and launched Two Roads Capital. It’s not clear exactly when Fund I hit the market, but sources said Zarotsky has been premarketing since at least last year.

Two Roads is targeting $350 million for Two Roads Partners Fund I, according to sources and a filing with the SEC in June. Lincoln International is working with Two Roads as placement agent, according to a Form D fundraising document filed in June.

Zarotsky did not respond to a comment request. Despite leaving daily management at Soundcore, Zarotsky retains an ownership stake in the management company, according to Soundcore’s Form ADV.

Two Roads’ fund is in the market at the same time as Soundcore’s Fund III, which is targeting $450 million, according to Form D fundraising documents. It’s also not clear how much that fund has pulled in so far.

Zarotsky joined Soundcore about a year after founder Jarrett Turner launched it in 2015. Last year, Buyouts revealed Zarotsky would not be part of Soundcore’s Fund III, which was just hitting the market. Zarotsky was expected to continue managing investments out of earlier funds alongside Turner, Buyouts reported.

Two Roads and Soundcore list many of the same investments on their websites, including American Restoration, Omega Morgan, Roofing Corp of America, Custom Goods and InfraStripe, among others. It’s not clear if Zarotsky and Two Roads are involved in managing those investments.

Soundcore’s Form ADV makes reference to the situation: “The principals of Soundcore have each formed their own independent investment adviser, Soundcore Capital Partners, LP and Two Roads Capital LP. Both principals, along with the Soundcore team, continue to manage the affairs of the Funds.”

The ADV warns that conflicts could arise around portfolio company competition, or if the principals spend time “on newco business as compared to Soundcore’s business.” The firm said it believes the conflicts are mitigated through the “fiduciary duty requirements” in fund governing documents, as well as “the disclosures that have been made to Soundcore limited partners and limited partners of the principals’ new investment advisers.”

Zarotsky launched his firm with some other professionals from Soundcore, including Frank Mancuso, head of origination; Jillian Freeman, head of finance; principals George Rolfs and John Gabler; vice president Jack Tatlow; and Devin McTague, investor relations chief.

Soundcore closed its debut institutional fund on $350 million in 2018. Fund I was called Soundcore Capital Partners II to reflect the fact that the firm had three pre-fund investments after inception.

Soundcore expanded its senior management team with several significant hires. It brought on ex-Wellspring Capital executive Alexander Bues in March 2022 as a partner to lead deal origination. The firm also hired as a partner Jeff Long, who has both investing and operating experience, with stints at Centerbridge Partners and Vestar Capital, according to his LinkedIn profile. Partner Eric Korsten left earlier this year and joined Argand Partners.

Update: This story was updated to reflect that partner Eric Korsten left Soundcore earlier this year.