New State Capital Partners LLC at a Glance
Fund: New State Capital Partners Fund LP
Target: $150 mln
Raised: $46 mln
Placement Agent: None
Strategy: To make minority and majority investments in mid-market companies operating in business services, health care services and industrial industries; invests up to $35 million of equity in each deal
Key Executives: David Blechman, John Beauclair, John Kim, Michael Scott
Offices: New York and Dallas
New State Capital Partners LLC, which is not using a placement agent, has been in the market since around the beginning of the year, according to a potential investor in the fund. According to a Form D filed with the SEC on June 15, the firm registered its first sale of fund interests on June 2, and does not expect the offering to last more than a year. The fund has six investors so far. Executives at the New York-based firm did not respond to requests for comment.
Already more than $2 billion has been raised this year for debut buyout funds, according to our estimates. Other notable firms in the market with maiden efforts include Angeles Equity, seeking $300 million earmarked for mid-market industrial deals; Atlas Merchant Capital LLC, which has secured an estimated $200 million of the $1 billion it seeks for a financial services-focused fund; and CenterGate Capital, which is targeting $300 million for a mid-market fund and which, like New State, boasts an H.I.G. Capital pedigree.
Founded in 2013 by Partner David Blechman, formerly a managing director at H.I.G., New State Capital has $173.9 million in discretionary assets under management, according to the firm’s Form ADV filed last month with the SEC (not including the $46 million raised for the debut fund). The money is housed in three funds: NS CCC Partners LP ($30.4 million in gross asset value); NS Gautier Partners LP ($51.5 million); and NS UMS Investment LLC ($92.0 million). Those pools appear to correspond to the firm’s investments in its three portfolio companies – Central Conveyor Co, Gautier Steel LTD and United Medical Systems.
Along with Blechman, the senior investment team consists of John Beauclair, a partner based in New York and former principal at technology specialist Vector Capital; John Kim, a partner and chief compliance officer based in New York and former executive director in the financial sponsors and leveraged finance group at UBS Investment Bank; and Michael Scott, a managing director-operations based in Dallas and previously a partner in the restructuring practice at Ernst & Young.
Blechman is the principal owner of the firm, according to a brochure attached to the Form ADV. New State Capital’s website also lists six operating partners. However, the Form ADV gives the employee count as four, suggesting the operating partners are not full-time employees of the firm.
The firm invests $5 million to $35 million at at time in a variety of transactions, including control-style buyouts, growth capital investments, minority transactions, corporate carve-outs, junior-debt deals and restructurings, according to its website. It prefers to back well-managed companies generating EBITDA in the range of $5 million to $30 million and with enterprise values of $25 million to $200 million. The firm plans to use “a relatively conservative amount of leverage” on its deals, according to the Form ADV brochure. It expects to invest primarily in the United States.
New State Capital describes its three portfolio companies on its website. United Medical Systems provides mobile medical equipment and services to hospitals and related facilities, Central Conveyor Co builds material handling systems, and Gautier Steel produces specialty metal plates and other products.
The firm charges up to 2 percent as an annual management fee and a carried interest of up to 20 percent, according to the Form ADV brochure.
Action Item: For more about the fund email John Kim at firstname.lastname@example.org
(Update: This story was updated with additional information included in a Form D filed by New State Capital on June 16, as well as additional background infromation on debut funds raised this year.)