Latino-led OceanSound targets $1bn for sophomore tech fund

Emerging manager OceanSound Partners, led by veterans of Veritas Capital, TCV and HIG Capital, is in the market with a second flagship buyout fund.

OceanSound Partners Fund II is targeting $1 billion, according to pension and Form D documents. Sixpoint Partners is the placement agent.

Rolled out in late 2022, the new offering came roughly a year after the close of OceanSound’s debut fund. Billed as the largest Latino-led first-time vehicle on record – a reference to managing partner Joe Benavides – Fund I secured $780 million.

In a tough fundraising environment, where cash-poor LPs are reserving their limited capital for well-established GPs, OceanSound might have its work cut out for it. The firm is perhaps up for the challenge, however, having raised Fund I during the pandemic.

OceanSound was launched in 2018 by a founding team with considerable private equity bona fides.

Benavides is an ex-partner at Veritas, while partner Ted Coons is a former general partner at TCV, and partner Jeff Kelly, a former principal at HIG. Benavides earlier worked with Coons at Blackstone, while his tenure at Veritas coincided with a prior role held by Kelly.

OceanSound makes control investments in US mid-market software, technology-enabled services and hardware companies serving government, enterprise and industrial sectors, especially regulated markets. It mostly does founder-owned, carve-out and public-to-private deals valued at up to $750 million.

Target businesses, with equity needs of $350 million or more, have positive cashflow and operate in large markets, among other characteristics, Los Angeles City Employees’ Retirement System documents said.

Fund II will make six to eight platform investments, according to LACERS, which is committing $25 million.

OceanSound’s most recent platform investment, announced in January, is Gannett Fleming, an engineering and infrastructure solutions provider. The company’s opportunity set, Benavides told PE Hub, is linked to the “massive infrastructure transformation” currently taking place in the US.

Later in the year, OceanSound announced the merger of CFM, NXTsoft and IMM, creating Kinective, a connectivity, workflow and analytics software provider to the banking sector. CFM was originally backed in 2021.

OceanSound Partners Fund I was generating a net IRR of 24.1 percent as of December 2022, LACERS documents said.

OceanSound has a team of 24 employees – among them 17 investment professionals – based in its New York office. They include a fourth partner, Ariel Garcia, a one-time operating partner and head of value creation at Vector Capital, who joined last year.

The firm declined to provide a comment on this story.