Monument Lowers Sights For Fund III

Monument Advisors Inc., a micro-cap buyout firm based in Indianapolis, has halved the target for its third fund, co-founder Larry Wechter told Buyouts. The firm will now target $50 million for Monument Capital Partners III LP, which it hopes to start raising in the fall.

Back in December, Wechter expected the firm to target $100 million for the fund. That target figure, he said, had been chosen largely to attract a host of new prospective limited partners, many of whom don’t invest in funds of less than $100 million.

Now Wechter feels $50 million is a more appropriate follow-up to the firm’s previous fund, a $22 million pool of capital raised in 2000.

“We didn’t want to let the tail wag the dog,” Wechter said.

Monument Advisors is open to the idea of contracting a placement agent to help the firm attract more institutional investors from the Chicago and New York markets, Wechter said.

Monument Advisors’s existing LP base includes banks, insurance companies and other institutional investors, primarily from the Indianapolis area. Wechter declined to name any of the specific investors.

Though a $50 million fund is below the threshold of most placement agents, which typically prefer to work with funds of at least $250 million, Monument Advisors expects to gradually increase the size of its funds, so there is the potential to establish a long-term relationship with the firm at the ground floor, Wechter said.

Wechter, a former executive with automobile auction chain ADESA Corp., and Joseph Schaffer, a former assistant vice president responsible for loan syndication at First Chicago Capital Markets, founded Monument Advisors in 1996.

The firm’s first fund, a $12 million, vintage-1997 vehicle, generated an investment multiple of about 1.4x and a net internal rate of return of more than 12 percent, Wechter said. Fund II has generated an investment multiple of close to 2.0x and a net IRR of almost 10 percent, he added.

Wechter said he hopes to finish raising Fund III by the end of 2011.

Monument Advisors targets established, Midwest-based businesses in the services, distribution and manufacturing industries with enterprise values of up to $20 million.