Firms & Funds

New Mountain shoots past $12bn target for seventh flagship

At $12.4bn, the flagship is already the largest in New Mountain’s 25-year history, exceeding by 29% the size of its 2020-vintage predecessor.

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New Mountain Capital raised almost $12.4 billion for a seventh flagship buyout offering, just over the fund’s $12 billion target.

The New York manager recently disclosed New Mountain Partners VII’s haul in Form D documents. At $12.4 billion, the flagship is already the largest in New Mountain’s 25-year history, exceeding by 29 percent the size of its 2020-vintage predecessor.

The GP is committing $900 million to Fund VII, according to Carleton University Retirement Plan documents. The system also confirmed the $12 billion target, reported last year by Buyouts.

New Mountain appears to be staying on the fundraising trail. The firm declined to comment.

In a tough capital-raising environment, where LP supply is an issue, large-cap funds have had mixed success. Some of private equity’s biggest brands, such as Apollo Global Management, Carlyle, Hellman & Friedman and TPG, have closed their flagships below target, often after long stints on the road.

However, some large-caps have persevered despite the challenges, among them last year’s top fund in North America, Clayton Dubilier & Rice’s 12th flagship, closed at an above-target $26 billion. New Mountain seems to be in this camp.

New Mountain was founded in 1999 by CEO Steven Klinsky with Robert Grusky and David Wargo. Klinsky, the principal owner, leads a team of roughly 40 managing directors, including Matthew Holt, president of the private equity business. The shop also sponsors credit and net-lease real estate strategies.

The flagship strategy has since inception emphasized control investing in mid-market companies operating in defensive growth industries – or industries that are viable in both up- and down-cycles and large enough to achieve high valuations and returns at exit.

Recent fund performance

  • Fund VI (2020 vintage): IRR: 15.54%; TVPI: 1.21x
  • Fund V (2017 vintage): IRR: 33.01%; TVPI: 2.56x
  • Fund IV (2014 vintage): IRR: 20.50%; TVPI: 2.03x
  • Fund III (2007 vintage): IRR: 12.30%; TVPI: 1.95x

Source: Buyouts data as of June 30 and September 30, 2023, citing various public pensions. Subscribers can view here.

 

New Mountain typically invests $100 million-$500 million in companies with values of $100 million-$1 billion. Sectors of interest are advanced materials, tech-enabled business services, financial services, consumer products, infrastructure services, data, HR management, specialized software, healthcare and digital marketing.

Fund VII is expected to make more than 20 platform investments, Carleton University documents said. The target return is a 20 percent net IRR and a 2.5x multiple over a 10-year term.

The firm has so far this year announced two deals – one a new investment and the other an exit. In March, New Mountain said it had agreed to invest in the US arm of Grant Thornton, a provider of audit and assurance, tax and advisory services.

In the same month, a deal was struck to sell ILC Dover, an engineered solutions provider to the pharmaceutical, biopharmaceutical, food and beverage and aerospace and defense industries, to Ingersoll Rand. The cash purchase price is $2.325 billion.

Along with the flagship, New Mountain is in the market with New Mountain Strategic Equity Fund II, which pursues the same defensive growth strategy but with a focus on non-control investing. The vehicle has a target of $1 billion, Buyouts reported last year.