PNC Spawns New Firms For Buyouts

Firm: Incline Management Corp.

Fund: Incline Equity Partners III LP

Target: $300 million

Amount Raised: $110 million

Placement Agent: Sixpoint Partners

PNC Financial Services Group Inc. may be seeking to carve out its own path in a buyouts market reshaped by the Dodd-Frank financial reform law and its Volcker Rule.

To some extent, the Pittsburgh bank is responding as a number of other banks have; three executives from its buyouts team, PNC Equity Partners, spun out in April to form Incline Management Corp., taking responsibility for the ongoing management of two existing PNC funds.

In the meantime, PNC appears to be launching a new in-house fund; the U.S. Patent and Trademark Office approved a trademark in October for PNC RiverArch Capital, a firm dedicated to private equity investments and mezzanine investments, according to a filing.

The bank has shown an independent approach toward the changed environment. Buyouts reported in June that PNC has decided to do away with limited partners for its latest mezzanine fund, instead providing the full $500 million from its own balance sheet to its affiliate PNC Mezzanine Capital.

A spokeswoman for the bank declined to comment.

Incline Management Corp. is raising a $300 million fund now that could close by next spring, a person familiar with the effort told Buyouts. The fund held a first close for about $110 million in October, the person said. Regulatory filings show that the fund, Incline Equity Partners III LP, includes a feeder fund and a sidecar vehicle, Incline Equity Partners III (PSERS) LP, apparently for the limited partner Pennsylvania Public School Employees’ Retirement System.

A spokeswoman for PSERS declined to comment.

Incline Management has done well in a difficult fundraising environment, said the person familiar with the effort. “For the right funds, there definitely is a market.”

The firm seeks to invest $10 million to $30 million in North American companies with an enterprise value of $25 million to $100 million, according to its Web site. It targets companies in distribution, business services and specialized light manufacturing industries. Founding partners Jack Glover, Wali Bacdayan, and Justin Bertram had been at PNC since the mid to late 1990s.

In the meantime, PNC RiverArch Capital is apparently seeking to pursue a similar strategy. David Hillman, formerly president and partner at PNC Equity Partners, and Mike Hand, who had been a vice president there since 2008, co-founded the new firm, according to the men’s Linkedin profiles.

PNC RiverArch seeks well-positioned companies where it can invest $10 million to $50 million of equity capital to support leveraged and management buyouts. The firm invests across a variety of industry sectors, including outsourced services, niche manufacturing, and value-added distribution.