New MainStream targets $350 mln for Fund III

  • The firm is eyeing a first close later in September
  • Fund I netting a 16 pct IRR
  • Received $25 mln commitment from Illinois Municipal

New MainStream Capital is poised to hold a first close later this month on its third fund, targeting $350 million, according to an investor presentation obtained by Buyouts.

New MainStream will use Fund III to invest in lower mid-market healthcare and business services companies. The typical portfolio company will have an enterprise value of $150 million or less, and the firm plans to invest between $10 million and $50 million of equity per deal.

In its presentation, the firm counts its investment in healthcare provider MCCI Medical Group as exemplary of its investment strategy. New MainStream invested $18 million in the business, including follow-on capital, and later achieved a 7.1x return on the investment when it sold MCCI to Humana.

New Mainstream Capital’s second fund, which held a final close on $252 million million in 2015, was netting a 9 percent internal rate of return and 1.1x multiple as of June 30, according to the presentation. Fund I, the size of which wasn’t disclosed, was netting a 16 percent IRR and 2x multiple as of the same date.

The firm declined to comment.

Illinois Municipal Retirement Fund committed $25 million to New MainStream Capital III at its August 18 meeting, according to a press release. Two of Illinois Municipal’s separate account managers, Abbott Capital and Pantheon, will commit a combined $6.8 million to the fund on the retirement system’s behalf as well.

Managing Partners Martin Chavez and Kevin Jordan spun New Mainstream Capital out of Goldman Sachs’s merchant banking division in 2010. Luis Gonzalez, a former managing director of MBF Healthcare Partners, and James Wilson, formerly of HWP, are partners at the firm.

New MainStream Capital has offices in New York City and Dallas.

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