Firm: Morgan Creek Capital Management
Fund: Morgan Creek Partners III LP
Target: $275 million
Legal Adviser: Seward & Kissel LLP
Morgan Creek Capital Management expected to hold a first close on its third vehicle by the end of March as it continues its strategy of raising and deploying a fund of funds each year. The fund sports a $275 million target.
The Chapel Hill, N.C.-based investment adviser and fund-of-funds manager has raked in between $125 million and $150 million for Morgan Creek Partners III LP, whose predecessor was earmarked for a mix of buyout funds (30 percent), real estate, energy and venture capital funds, a source familiar with the effort told Buyouts. On the buyout side of the ledger, Morgan Creek favors shops that focus on the small end of the middle market, such as Monomoy Capital Partners LLC, which received a commitment. Monomoy Capital specializes in turnarounds of businesses with annual revenues of between $20 million and $200 million and typically deploys equity in slugs ranging from $5 million to $30 million.
Expect half of the new fund’s capital to be deployed to invest in assets outside the United States. The firm recently expanded into Asia and has two principals, Managing Directors Nirav Kachalia and Jason Zhang, on the ground in China.
Supplying capital to Morgan Creek have been family offices, foundations and university endowments, where several of the firm’s professionals have logged time. Last year the firm closed on $260 million for its second fund of funds, $10 million above target.
President and Chief Investment Officer Mark Yusko founded the firm in 2004 after six years as CIO at the University of North Carolina Chapel Hill endowment. Yusko also spent time as an investment director at the University of Notre Dame. Morgan Creek Principal Brad Briner, Managing Director Mike Hennessy and Vice President Josh Tilley all came to the firm after stints at the UNC endowment.
Morgan Creek serves as investment adviser to Hatteras Investment Partners, a Raleigh, N.C.-based investment firm also founded by Yusko, and Salient Partners, an investment firm headquartered in Houston, Texas.—J.P.