New York Common makes hefty commitment to L2 Point’s $300m debut fund

L2 Point Management, led by ex-Sixth Street principal Kerstin Dittmar, raised a weighty commitment from a top US pension system for its first-time offering.

L2 Point Opportunities I in the fall secured $100 million from New York State Common Retirement Fund, the system reported. As a result, New York Common accounts for one-third of the fund’s $300 million target and half of its $200 million raised to date.

New York Common, sponsor of an emerging manager program since 2005, also committed $100 million to a co-investment sidecar pool. Another disclosed LP is MPowered Capital, an investor in diverse alternative asset firms.

L2 Point was founded in 2019 by managing partner Dittmar, who was responsible for developing and leading structured equity investing at Sixth Street when it was part of TPG. Before joining Sixth Street in 2010, she worked in the special situations group of Goldman Sachs.

Another senior member of the San Francisco-based team is COO Danielle Beyer, formerly a principal with Valor Equity Partners.

L2 Point’s strategy borrows from Dittmar’s experience at Sixth Street. The focus is on providing structured equity – a hybrid form of capital ranking behind debt in order of repayment but in front of common equity – to back high-growth, late-stage companies.

Target businesses are located in consumer, healthcare, media and technology sectors. They are proven, have reached a sustainable scale and can operate profitably, but are looking to reinvest in growth opportunities, according to a presentation to Chicago Teachers’ Pension Fund.

Through the use of structured equity, L2 Point’s strategy creates exposure to growth companies in a way that mitigates downside risk while enabling upside potential, the Chicago Teachers’ presentation said.

Structured equity could be having a moment thanks to high interest rates. Many businesses took on cheap debt in the years prior to 2022 and will soon have to refinance. Others are approaching the end of their funding runway. In both cases, structured equity may be a viable alternative to expensive credit and dilutive equity.

Before launching Fund I last year, L2 Point invested deal by deal, for which it raised more than $100 million. Transactions completed by the debut vehicle include a $45 million financing led for military-grade cybersecurity platform SimSpace, announced this month.

In 2022, Fund I backed Fabletics, an activewear fashion brand co-founded by actor Kate Hudson. It also led a $125 million financing of Wasabi Technologies, a hot cloud storage company, with participation from Cerberus Capital Management’s Cedar Pine, among others.

L2 Point is one of several women-led emerging managers now fundraising. Others include Coalesce Capital, founded by former Warburg Pincus partner Stephanie Geveda; Emerald Bridge Capital, founded by ex-Ridgemont Equity partner Cay Freihofer; and Grafine Partners, founded by one-time Riverstone Holdings partner Elizabeth Weymouth.

L2 Point declined to provide a comment on this story.