Valor Equity returns to market with fifth flagship, targets $1.25 bln

Valor Equity Partners is back on the fundraising trail with a fifth growth-focused vehicle targeted at $1.25 billion, according to an SEC filing.

Valor Equity Partners V comes a little over a year after the final close of Fund IV, which secured $1.05 billion following an increase in the hard cap. If the new fund meets its goal, it will be the Chicago-based private equity firm’s largest to date, exceeding its predecessor by 19 percent.

Prior Valor funds have been backed by U.S. and global charitable institutions, endowments and foundations, pension plans, high-net-wealth individuals and other investors, the firm’s ADV filings show. It generally charges a 2 percent management fee and a 20 percent carried-interest rate, subject to a preferred return.

Fund IV’s disclosed limited partners included California Public Employees’ Retirement System, California State Teachers’ Retirement System, Illinois Municipal Retirement Fund, New York City Police Pension Fund and New York State Teachers’ Retirement System. Illinois Municipal is also committing $75 million to Fund V, Buyouts reported this month.

Valor did not respond to a request for comment on its fundraising activity.

Fund V is expected to maintain Valor’s strategy of making control and non-control investments in high-growth businesses, many of them in consumer, engineered products and services sectors. The firm partners with entrepreneurial companies at various stages of development that have the potential to expand through tech-enabled opportunities.

Fund IV made initial investments ranging from $25 million to $75 million.

Along with the flagship fund, Valor is marketing a new pool earmarked for investments in early-stage food, food tech and retail tech companies. Valor Siren Ventures I, which is seeking $400 million, earlier this year obtained a $100 million cornerstone commitment from Starbucks.

A recurring Valor deal partner is billionaire entrepreneur Elon Musk. Valor invested in internet payment system PayPal, co-founded by Musk and sold in 2002 to eBay for $1.5 billion. The firm also invested in Musk-led space launch provider SpaceX and electric car maker Tesla.

In June, Ontario Teachers’ Pension Plan said its newly minted tech investment group invested in SpaceX, reportedly as a part of a $300 million-plus follow-on financing.

Valor’s disclosed investments in 2019 include digital security platform HackerOne, for which the firm led a $36.4 million financing. It also led a $30 million financing of Mythic, an AI inference processor company, and co-led a $210 million financing of Sonder, a hospitality brand.

Valor, which also has offices in New York and San Francisco, was founded in 2001 by CEO and CIO Antonio Gracias. Gracias was previously the founder and managing member of MG Capital, where he acquired and headed several manufacturing and tech-related businesses.

Other senior team members include Partners David Obrand, Vivek Pattipati, Juan Sabater, Jonathan Shulkin, Michael Soenen and Timothy Watkins. Richard Tait, also a partner, oversees Valor Siren.

Action Item: See Valor Equity Partners’ ADV filings here.