NewSpring Capital is running a process that will move its portfolio company Verisma out of an older fund and into a continuation pool for more time and capital to grow the business, a source told Buyouts.
As part of the deal, investors will contribute a slug of fresh capital into NewSpring’s Fund IV, which is in the market now targeting $175 million, according to sources.
NewSpring, based in Radnor, Pennsylvania, is an example of a lower mid-market firm using the secondaries market to extend its hold over a treasured investment, as well as to attract capital into a new fund. The lower mid-market has not traditionally generated much GP-led secondaries activity, but the market has expanded as new firms raise funds and GPs seek to find ways to generate liquidity on older assets.
No one from NewSpring returned a comment request Wednesday. Triago is working on both the fundraising process and the secondary, according to the source and materials seen by Buyouts.
Verisma, a healthcare IT company, has two lead investors for the secondaries process, though it’s not clear who. The single-asset process will allow limited partners in the third fund to cash out of their interests in Verisma, and/or reinvest in the continuation fund, the source said. Executives with NewSpring and Verisma are expected to contribute capital into the deal, the source said.
The continuation fund will have a five-year term, though NewSpring could exit Verisma sooner than that, the source said.
NewSpring Capital’s healthcare team first invested in Verisma in 2015, joining an investor group that kicked in $12 million. It had originally targeted $200 million for its third fund, though it’s not clear how much it ultimately closed on. Fund III had a gross asset value of about $90.6 million as of March, according to NewSpring’s Form ADV.
The firm meanwhile is targeting $175 million for its fourth Health Capital pool, according to marketing documents seen by Buyouts. The healthcare group focuses on tech-enabled healthcare services, niche clinical providers and specialty pharmaceuticals, the materials said.
The firm has returned 6.4x multiple on realized proceeds and 4x multiple on unrealized proceeds, the materials said. The group, with seven professionals, manages about $287 million of assets. The healthcare group is led by general partners Brian Murphy and Kapila Ratnam, partner Mike Kaplan and principal Matt Plevelich.