Long-term investor Altas banks most of $4bn target for Fund III

Altas Partners, a trailblazer of long-dated private equity investing, raised $3.3 billion for its third flagship offering, sources told Buyouts.

This puts Altas Partners Holdings III more than 80 percent of the way to meeting a $4 billion target, sources said. The vehicle is expected to wrap up by mid-2023.

Fund III, unveiled last year, is already larger than its predecessor. Fund II closed in 2019 at $3 billion, ahead of a $2.5 billion target.

Long-duration funds, which take multiple forms, have gained some traction with certain types of GPs and LPs. They allow sponsors to invest in assets flexibly and beyond the usual three-to-five-year hold period, earning returns that stem from the compounding of capital over time. In addition, they create access to businesses that may not fit in a traditional portfolio.

Over the years, a wide range of PE firms, both big and small, embraced the strategy. They include KKR, which is poised to close the largest long-term fund on record – the $16 billion KKR Core Platform II – as well as BlackRock, Blackstone, Carlyle, Cove Hill Partners, CVC, EQT and Silver Lake. Brookfield is also preparing to enter the space.

KKR recently argued the advantages of having a substantial portfolio of long-life assets in a market that is taking on more uncertainty and volatility, Buyouts reported.

Altas, founded in 2012 by CEO and managing partner Andrew Sheiner, a former Onex executive, was one of the first PE shops to launch a dedicated long-term fund. Its strategy is to make control investments of roughly $400 million to $1 billion or greater in hard-to-replicate companies and then hold them for an indefinite term to generate maximum value.

“Great businesses are hard to buy,” Sheiner told Buyouts a year after establishing Altas. “If you are fortunate enough to own one, and that business continues to perform strongly, you should be careful about selling it.”

Beginning as a deal-by-deal investor, the firm secured just over $1 billion for an inaugural vehicle in 2016.

Since then, Altas has every year selected for acquisition one or two North American companies operating in the services, specialized industrials and healthcare industries. The slow and deliberate approach to portfolio-building has resulted in 10 platform investments, three of which (Capital Vision Services, Medforth Global Healthcare Education and NSC Minerals) have been exited.

The most recent new investment, announced in mid-2021, is Pye-Barker Fire & Safety, a fire protection services provider to US commercial end-markets. An existing investment, Tecta America, a US commercial roofing contractor and consolidator, also last year obtained the backing of Leonard Green & Partners.

Sheiner oversees a leadership team of 11, among them managing partners Scott Werry and Christopher McElhone and chair Kathleen Taylor, the ex-CEO of Four Seasons Hotels and Resorts. Earlier this year, Hellman & Friedman’s Paul Emery and Cinven’s Michael Korzinstone joined the team as partners.

Altas has offices in Toronto and New York. It declined to provide a comment on this story.