Vance Street unveils latest flagship fund, sets $550m target

Vance Street Capital rolled out a fourth flagship buyout offering to invest in mid-market manufacturing opportunities.

Vance Street Capital IV is targeted to bring in $550 million, according to Minnesota State Board of Investment documents, up 27 percent from the amount raised by its 2020-vintage predecessor. The hard-cap was not disclosed.

The Los Angeles firm was launched in 2007 by Richard Crowell and Richard Roeder. The pair formerly co-founded Aurora Capital Group, where Crowell was president, and Roeder, managing director.

Crowell remains a Vance Street managing partner. However, the shop is today led by managing partners Brian Martin and Mike Janish, who joined in 2010 and 2016, respectively. Martin was formerly an executive in American Capital’s LBO group, while Janish was CEO of American Capital-backed Avalon Laboratories.

Other senior team members include partners John LeRosen, Nic Janneck and Steve Sandbo.

Vance Street makes control investments in mid-market B2B manufacturers in the US and Canada, typically with EBITDA of $3 million to $30 million and enterprise values of $30 million to $350 million.

Target companies, which make highly engineered products, reside in medical technology, industrial technology, life science and aerospace and defense sectors. They tend to be quite competitive through high barriers to entry and valuable intellectual property, have significant regulatory oversight, and generate strong cashflow, MSBI documents said.

This operationally intensive strategy has seen Vance Street deploy the lion’s share of its capital to family and founder-owned businesses and corporate carve-outs.

Since inception, the firm has invested $966.7 million across 22 platform and 35 add-on acquisitions, MSBI documents said.

In a subdued deal environment, mid-market buyouts are drawing more attention, in part because they often have attractive entry valuations and are easier to finance than large caps. Of LPs responding to Coller Capital’s Global Private Equity Barometer: Summer 2023, 82 percent said the space should offer good opportunities to GPs over the next two years.

Vance Street’s recent activity includes a secondaries deal. In December, it announced raising a continuation fund to support the ongoing growth of Jet Parts Engineering, an aftermarket solutions provider to the commercial aerospace industry, first backed in 2018. Hamilton Lane and Apogem Capital led the transaction.

In the same month, the firm announced an agreement to sell Terra Insights, a geotechnical, structural and geospatial monitor of mining and infrastructure assets, to Orica for C$505 million ($377 million). Terra secured an initial investment in 2017.

Vance Street Capital III was earning a 1.3x net multiple and a 19.4 percent net IRR as of June 2023, according to MSBI documents. Fund II was earning a 2.4x net multiple and a 25.2 percent net IRR.

Vance Street declined to provide a comment on this story.