NexPhase reaps over 5x multiple on InsideRE sale

NexPhase Capital is set to make more than 5x multiple on its investment in Inside Real Estate, a provider of cloud-based real estate software, sources familiar with the deal told Buyouts.

NexPhase sold the company to Lovell Minnick Partners on Aug. 20, the people said. Post-sale, the firm is set to realize more than 5x gross multiple on invested cost/capital, they said.

InsideRE, headquartered in Salt Lake City, Utah, provides cloud-based marketing software for residential real estate agents and brokers to source, convert and manage customers.

NexPhase is exiting the investment after a three-year hold. The New York-based firm initially invested in the company in October 2016 out of its NexPhase Capital Fund III. NexPhase completed a few add-ons to its platform. Simultaneously with the company’s acquisition, the firm merged it with Kunversion, a software marketing platform.

In December 2017, the firm acquired BrokerSumo, a commission management software provider for real estate brokers. And in February 2018, the firm also acquired Circlepix, a real estate listing software provider.

GCA Advisors advised InsideRE on its sale, the sources said.

NexPhase, established by the former principals of Moelis Capital Partners in 2007, invests in entrepreneur-owned lower middle-market companies. The firm is focused on investments in software and services, consumer, and healthcare industries.

Investment in InsideRE was in line with NexPhase’s key themes around software investing, according to sources.

The firm seeks to capitalize on software trends, including digitization of paper-based processes, transition from on-premise legacy systems to SaaS or cloud solutions, and on companies’ efficiency gains through workflow and process automation tools.

NexPhase advises $1.2 billion of private equity capital, including through a strategic sub-advising relationship with Moelis Asset Management, according to the firm’s website. Its most recent pool, NexPhase Capital Fund III, closed in January 2018 on $361 million.

NexPhase declined to comment for the story. Lovell Minnick declined to comment beyond its official announcement. Inside Real Estate did not return request for comment before press.

Action Item: View NexPhase’s latest Form ADV.