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New MainStream looks to healthcare, business services with $650m Fund IV

The firm's lower mid-market strategy has already gained interest from some major LPs.

New MainStream Capital is targeting $650 million for its fourth lower mid-market fund, according to a Form D.

The firm’s sectors of focus, healthcare and business services have seen positive headwinds during the pandemic.

Based on publicly available data, NMS Fund IV has already attracted commitments from Chicago Teachers’ Pension Fund and New York State Teachers’ Retirement System.

Chicago Teachers committed $20 million, while NYS Teachers committed $100 million. Both were also LPs in the firm’s previous vehicle.

NMS Fund III targeted $350 million, as Buyouts reported. It closed in 2019 at its $450 million hard-cap, according to a press release.

New MainStream was spun out of Goldman Sachs’ merchant banking division in 2010 by managing partners Martin Chavez and Kevin Jordan. Other partners are Luis Gonzalez, Thomas C Nolan and chief financial officer James G Wilson, according to the firm’s website.

The prior fund is still early in its life, so returns are not yet meaningful. According to a consultant performance report given to Los Angeles City Employees’ Retirement System last year, its net internal rate of return as of December 31, 2019 was -4.7 percent, as Buyouts reported.

According to New MainStream’s Form ADV, the firm charges the industry-standard fee structure of a 2 percent management fee, 20 percent carry and an 8 percent hurdle.

New MainStream did not respond to a request for comment.

Action Item: read New MainStream’s Form ADV here.