Jon McCarthy, a former OMERS Private Equity executive, is helping to lay the groundwork for the inaugural fund of an operationally focused growth equity firm.
McCarthy and Chris Reynolds earlier this year launched Venn Growth Partners, two people with knowledge of the matter told Buyouts. A third founding partner is expected to be brought on shortly, one person said, along with additional team members.
Venn Growth was set up to invest in lower mid-market businesses in consumer, education and healthcare services sectors. It is presently following a deal-by-deal strategy, one of the sources said. The firm is expected to begin marketing a debut offering later in 2020.
Venn Growth Partners I will target $300 million. It will acquire minority stakes in established North American companies with revenue of $10 million to $100 million, partnering with families and founders to accelerate growth through operational improvements and innovation.
Private equity firms with first-time vehicles are facing more fundraising challenges due to the health crisis. Venn Growth, however, is already fielding interest in Fund I from family offices, high-net-worth investors and institutions, one of the sources said.
McCarthy was with OMERS for 12 years before departing in 2019. He rose to become a managing director in the North American PE team and was responsible for several major investments. They include auto repair chain Caliber Collision, sold last year to Hellman & Friedman.
McCarthy was especially active in OMERS’ healthcare deals. He was a director of CBI Health, a rehabilitation and home health services provider bought in 2011 from Clearspring Capital Partners; and Forefront Dermatology, a dermatology practices network bought in 2016 from Varsity Healthcare Partners.
Prior to Venn Growth, McCarthy engaged in angel investing, his LinkedIn profile showed. His deals include First Bridge Centre, an applied behavior analysis therapy services provider, and California Cowboy, a social technical apparel designer.
Reynolds also worked at OMERS before joining McKinsey & Company in 2013, according to his LinkedIn profile. He was with McKinsey for six years, leaving as an associate partner. Reynolds’ activity before Venn Growth includes an executive role at Hudson’s Bay Company. He also invested in California Cowboy.
Growth equity has increased in popularity of late. Demand for the strategy peaked in 2019, when $102 billion was secured by 173 funds globally, PEI data showed. Activity remained steady in this year’s first half, with $33 million going to 78 funds.
Venn Growth, which has its head office in Toronto, declined to comment on this story.
Action item: Check out Private Equity International’s “Growth Capital Special: What’s the post-covid outlook?” here.
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