H.I.G. Capital seeks $2.25 bln for new strategy targeting stable companies

H.I.G. Capital has launched a fund that will target less complex situations and stable companies with lower return profiles than in its core private equity funds, according to three limited partners familiar with the situation.

The Miami firm recently launched H.I.G. Advantage fund, targeting $2.25 billion. Fund I is officially in the market, the LPs said.

The new strategy is led by Brian Schwartz, a senior H.I.G. executive who has co-led the middle-market fund. Schwartz has backed away from that strategy and will focus on H.I.G. Advantage. Executive Managing Director Rick Rosen, who has co-led the middle-market fund, has become the sole chief of the strategy, one of the LPs said.

Other executives on the H.I.G. Advantage team include Managing Directors Justin Reyna, Rahul Vinnakota and Rob Wolfson.

The difference between H.I.G. Advantage and the middle-market group is the type of companies the group targets. H.I.G. normally looks for complex situations and businesses under some kind of stress, one LP said.

H.I.G. Advantage will look for stable companies and less complex situations, the LP said. The fund is targeting above 20 percent gross internal rates of return and a 2.5x gross multiple, a second LP said. The fund will focus on investments around the same size that the middle-market fund sought, the LP said.

The second LP said this is a lower return profile than the core middle-market PE fund.

H.I.G. launched the fund to seize opportunities that don’t fit in the core funds because they lack stress or complexity, the first LP said. “Instead of just letting every other mid-market fund do the so-called normal deals, they’re saying, ‘we have enough capacity and knowledge’” to do these types of deals, the first LP said.

H.I.G. Capital manages more than $18 billion in discretionary capital.

Action Item: Check out H.I.G.’s Form ADV here: http://bit.ly/2r0l2AY

Photo of Brian Schwartz courtesy of H.I.G. Capital