Peak Rock shops next flagship as LPs stick with top performers

Peak Rock Capital is targeting $2 billion with a $2.5 billion hard-cap for its fourth flagship fund, after closing its prior pool in 2021, according to sources and a Form D fundraising document.

The firm is among a wave of GPs looking for capital in the tough fundraising market. Overexposed LPs who are slowing their pacing have helped widen the gap between strong performing firms able to attract capital and every other manager that has to struggle to get traction in the market.

Recently, Bain & Co reported that 2023 is shaping up as a record fundraising year for the buyout strategy, though with more capital going to far fewer funds than in the past. “At the end of the day, many LPs are voting with their wallets about ‘must have’ relationships with trusted partners that are rooted in returns,” Hugh MacArthur, chairman of Bain & Co’s global private equity practice, wrote on LinkedIn this week.

“According to Coller Capital’s Global Private Equity Barometer 2023-24, 80 percent of LPs have generated between 11 and 20 percent net returns from buyouts over the past five years. Moreover, as we saw in 2023, another 25 percent of global LPs intend to increase their allocation to private equity buyouts in the next 12 months. Where returns can be found, the dollars will follow.”

Peak Rock’s performance has been strong, and the firm has been returning capital to LPs, one of the sources said. The firm’s third fund, which closed on $2 billion, was generating a 1.26x total value to paid-in multiple and a 22.7 percent internal rate of return as of March, according to performance information from Florida State Board of Administration. Fund II was producing a 1.6x TVPI and a 31.5 percent IRR as of the same date, Florida SBA said.

Founded in 2012, Peak Rock makes equity and debt investments in lower- and mid-market companies in North America and Europe, according to the ADV. The firm’s primary focus is on opportunistic, underperforming and distressed lower-mid to mid-market opportunities, the filing said. It targets carve-outs, partnerships with owner-operators, restructurings and turnarounds, and other opportunities involving businesses with revenue of $50 million-$1 billion, the ADV said. It intends to build a portfolio of 15-20 control investments through a fund’s investment cycle, the ADV said.

Target sectors include business and tech-enabled services, consumer, distribution and logistics, energy and related services, food and beverage, healthcare, industrials and manufacturing and technology. Peak Rock writes equity checks of $40 million-$200 million per investment, the ADV said.

The firm also may make equity and debt investments in small- to mid-market opportunities in the commercial real estate sector, including in real estate-related assets and real estate operating companies, the ADV said.

The firm managed about $3.9 billion as of December 31, 2022, according to Peak Rock’s Form ADV. Peak Rock’s management company is principally owned by Anthony DiSimone, the ADV said. DiSimone, who formerly worked at Aurora Capital and HIG Capital, is CEO, while Steve Martinez, a former managing director at Aurora Resurgence, is president.

In August, the firm completed the acquisition of Rochester Midland Corp alongside the company’s founding family and management, according to a statement at the time.

A Peak Rock spokesperson declined to comment.