The firm declined to comment. In a statement issued this week, however, PCM said it had secured C$425 million for PCM Fund II in a first closing, amounting to nearly two-thirds of the target.
At the best of times, managers with first- or second-time offerings face barriers to getting the attention of LPs. In today’s rocky fundraising market, their challenges are multiplied, as overallocated LPs provide the little money they have to re-ups with long-time incumbents.
On the other hand, LPs retain an appetite for emerging managers formed by seasoned GP teams. A recent survey by Probitas Partners found 75 percent of investors are interested in spinouts where the team has significant experience working together.
This perhaps explains PCM’s success to date with Fund II. The firm was launched in 2018 by managing partners Steve Faraone and Mike Murray, who formerly led healthcare and consumer investing and financial services investing, respectively, in Ontario Teachers’ private capital group.
Fund II raised initial commitments from “marquee investors in Fund I,” sources said, as well as “some new dollars.” The statement noted the “continued foundational support” of Stephen Smith, co-founder of First National Financial Corp and PCM’s chairman.
Other Fund I LPs include institutions, among them Investment Management Corp of Ontario and Canada’s top banks. The vehicle was wrapped up last year at C$550 million.
PCM was set up to make long-term control investments in North American mid-market businesses with EBITDA of $5 million to $40 million. Targets are multi-site services providers in healthcare, financial and consumer sectors, typically with “recession-resistant” features and “a compelling growth thesis,” Murray said in a 2021 Buyouts interview.
Fund I made seven platform investments, such as last year’s high-profile acquisition of proxy advisor Glass Lewis. Though terms were not disclosed, Faraone alluded to the $2.3 billion valuation attracted by rival ISS in its 2020 deal with Deutsche Börse, PE Hub reported.
The Glass Lewis transaction shone a light on PCM. “You don’t often have the opportunity to acquire a global brand, especially the number-two player in a two-player market,” Faraone told Buyouts shortly after the deal was done.
PCM was part of another major deal in 2022. Portfolio company 123Dentist merged with Sentinel Capital Partners-backed Altima Dental, alongside Lapointe Group, creating one of the largest dental support organizations in Canada. KKR and KKR-backed Heartland Dental invested with the other sponsors.
In addition, the firm this year invested in Unison Risk Advisors, an insurance brokerage established in 2020 through the merger of Oswald Companies and RCM&D. It also invested in Victoria Park Medispa, a network of physician-led medical aesthetics clinics.
Fund II has already closed its inaugural platform deal. In the statement, PCM said it invested in Billyard Insurance Group, a brokerage with more than 70 locations across Canada.
Faraone and Murray oversee a team of 17 professionals operating from Toronto. Senior team members include partner Debra Dobson, a former executive with Danaher Corp and SCIEX, and partner Greg Mashinter, another veteran of Ontario Teachers’ private capital group. Mashinter came onboard this year.