Supply Chain Manager Forms Growth Capital Fund

DMC Capital Funding LLC, a new private investment firm, aims to provide capital to growing companies that normally would look to mid-market buyout shops. The firm’s fund has culled $100 million from friends and associates and its size could swell to between $400 million and $500 million, depending on demand.

Brothers Andrew and Ronald Lowinger, who run Distribution Management Consolidators Worldwide LLC, a New York-based supply chain management company, decided to raise the fund after noticing over the past year that many smaller companies were in dire need of growth capital, but couldn’t get it from private equity firms.

“One of the things about the downturn, it doesn’t change the fact that there is a great number of companies that are growing, are successful” but can’t get capital, Andrew Lowinger, told Buyouts. “If they don’t grow they die.”

The firm plans to take minority or majority stakes in well-established companies with $20 million to $200 million in annual revenue. The Lowingers plan to leverage their contacts and 30-plus years experience in the consumer product distribution and channel marketing industries to find deals. They don’t plan to leverage deals, but will be open to using debt financing when the market improves. The Lowingers cut their teeth in the 1970s at Unisonic Products Corp., an electronics company their father founded in 1951 that was generating $200 million in annual revenue in the dark days of the 1970s—an economic climate they see as similar to today’s.

Since the Lowingers began planning the fund, several buyout firms caught off guard by the credit crunch have contacted DMC Capital looking to exit or partner on portfolio companies, Lowinger said. He expects that demand to bloom as he continues to publicize the new fund. “We’ve really only been doing this on the Q-T,” he said.

About five people from DMC Worldwide with managerial experience are running the fund right now, and the company is looking to hire four or five more people in the near future with more of a pure finance background, Lowinger said.

DMC Capital is working on about eight potential deals. Lowinger expects to make investments of $5 million to $10 million per deal, though he’s flexible. “That’s a ‘guess-timate’ based on our history and the size of growth companies,” he said. “If there’s a good opportunity that comes along and a company requires $30 million, we’ll do it. We’re not tied to any number.”

Lowinger and his associates will be hosting an exhibit on the fund at the International Consumer Electronics Show in Las Vegas on Jan. 8-11.