McCarthy Closes Fund IV, Matching Vehicle

After about four months in the fundraising market, McCarthy Capital Corp., the private equity business of investment firm McCarthy Group LLC, has $125 million in dry powder to put to work in control and growth equity plays across the United States.

The Omaha, Neb.-based firm held a $62.5 million final close on Fulcrum Growth Partners IV LP, which includes commitments from 16 limited partners. That total was matched by Mutual of Omaha, an insurance and financial services company that maintains an ongoing investment partnership McCarthy Capital. Mutual of Omaha’s matching commitment is housed exclusively in a fund called Fulcrum Growth Partners III LP. New deals will be split 50/50 between the two funds.

A regulatory filing for Fund IV lists a hard cap of $75 million and a minimum investment limit of $250,000. The Nebraska Investment Council is a limited partner in the fund, according to meeting minutes published by the limited partner. McCarthy Capital did not hire a placement agent to help raise the fund, which held its final close on April 30.

According to Dana Bradford, president and managing partner of McCarthy Capital, the firm determines the size of its fund offerings based on projected volume of investment opportunities the companies will see over a given time.

“When we were looking at our deal flow, we felt $125 million would be what we could comfortably deploy in the next two to three years,” Bradford, said, noting that Fund IV will have a four-year investment period.

McCarthy Capital’s previous fund, Fulcrum Growth Partners II LP, raised $100 million from outside investors, giving the firm a total of $200 million when combined with the matching funds from Mutual of Omaha. Fund II has been completely invested and all new deals will be made through the new partnership.

Typical deals for McCarthy Capital involve industry-agnostic equity investments of at least $10 million into companies with revenues of more than $10 million per year with 3-year operating profits of more than $3 million annually. Bradford said he expects to close Fund IV’s first deal—a minority-stake growth capital investment—by the end of July.

Bradford said Fund IV’s fees are less than the traditional 2 percent management fee and 20 percent carried interest that adorn many private equity funds but decline to provide specifics.