Explore a new report from Apogem Capital and Coalition Greenwich analyzing how middle market private equity sponsors are navigating an environment characterized by volatile public markets, geopolitical uncertainty, and persistently high inflation. The report features trends and insights from more than 100 interviews with managing directors and partners at middle market private equity sponsors in the US.
The research revealed sponsors in the middle market could benefit from less competition for assets and more consistent opportunities for attractive exits relative to larger peers and sponsors operating in other segments of the market. Overall, participants articulated five strategies they are adopting to maximize the advantages in the middle market to negotiate challenging market conditions, outlined below:
- Build diversified portfolios emphasizing recession-resilient sectors
- Focus on creating value through operational improvements
- Lean into Environmental, Social and Governance (ESG) and Diversity and Inclusion (D&I) initiatives
- Capitalize on fundraising by larger private equity sponsors for attractive exit opportunities
- Cultivate relationships with reliable partners
Based on the findings, it is clear that middle market sponsors are preparing for a challenging period ahead. We believe cycle-tested managers with unique value-add should be well-positioned to navigate this complex environment, mitigate risks, and potentially produce attractive results.
View the full report here.
Coming off record-setting years in 2020 and 2021, private markets faced a starkly more challenging environment in 2022 across a range of metrics, including fundraising, deal activity, exit activity, and leverage levels. In the following short videos, Louise Woltz Smith, Managing Director, Private Equity at Apogem Capital, discusses potential risks, as well as attractive opportunities that could arise from this more challenging environment.
Deal Activity & Valuations: Louise addresses the impact of economic uncertainty, rising rates, and a sharply declining leveraged loan market on deal activity and valuations in 2022 and looks ahead to new risks and opportunities in 2023.
Due Diligence Priorities: Louise highlights key areas of focus as the team underwrites new opportunities in the current environment.
PE Performance & Resilience: Louise examines the types of PE portfolios that might perform best in a rising rate or recessionary environment.
Private Markets Risks & Opportunities: Louise discusses how private markets today compare to the Global Financial Crisis and evaluates where there are new risks and opportunities.
Apogem Capital (“Apogem”) held a final close for PA Real Assets Fund III (the “Fund” or “PARAF III”) on September 28, 2022, with approximately $265 million in total commitments. The Fund exceeded its target fund size of $200 million and increased third party capital commitments by over 80% from the predecessor fund.
“We are grateful to our limited partners who remain committed to Apogem’s private real assets total return-focused investment strategy,” said Chris Stringer, Interim CEO of Apogem Capital.
Zac McCarroll, Apogem’s Head of Real Assets, added, “The commitment of our partners has enabled Apogem to exceed our target fund size in a very challenging fundraising environment – we can now take advantage of the investment opportunity in front of us.”
Apogem’s dedicated Real Assets Team is focused on building a diversified portfolio across natural resources sectors, with an emphasis on identifying asymmetric return opportunities and generating cash yield. The Fund is expected to primarily consist of direct equity co-investments and secondaries.
Relative to other segments of capital markets, which have seen a rapid build-up in dry powder, capital has fled the real assets space, limiting investment in capex and exploration and constraining future supply. “We believe this capital constraint, coupled with the durable, growing demand for natural resources necessary to fuel economic advancement and the energy transition, has created a compelling opportunity to invest in profitable companies with long tailwinds at attractive valuations,” said Zac McCarroll.
The Fund’s limited partner base includes endowments, single and multi-family offices, and pension funds. PARAF III experienced a strong re-up rate of LPs from prior Apogem Real Assets funds, as well as several new investors, signifying growing interest in the space. Apogem employees also made meaningful commitments.
Please reach out to ApogemIR@apogemcapital.com with any questions or to learn more.
About Apogem Capital
Apogem Capital was formed in April 2022 through the combination of PA Capital, Madison Capital Funding and GoldPoint Partners to create a singular and unified, world class private markets’ investment firm. With approximately $39 billion in assets under management as of June 30, 2022, we believe Apogem has the deep relationships, data, and history in the middle market to deliver innovative solutions to both clients and sponsors. Apogem Capital offers investors access to the middle market’s growth engine through investments in leading private companies and funds. The Firm manages a streamlined suite of capital solutions, including direct lending, junior debt, primary fund investments, secondary investments, equity-co-investments, GP stakes, and private real assets. Apogem Capital is a wholly owned subsidiary of New York Life Insurance Company (“NYLIC”), through New York Life Investment Management Holdings, LLC (“NYLIM”).
Media Contacts
Allison Scott
Zef Vataj
Apogem Capital believes that ESG considerations can help provide better risk-adjusted returns to investors over the long term, and we are committed to continually advancing and improving responsible investing practices.
View our full report here.
Fann brings a strong track record in private markets and will oversee business development and investor relations and serve on investment committees
New York – Apogem Capital LLC (“Apogem”), a leading alternatives investment firm, today announced that David Fann, former Vice Chairman and Partner of Aksia LLC, has joined Apogem as Senior Managing Director and Vice Chairman. Fann is a highly regarded veteran in the institutional private alternatives industry.
In this newly created role, Fann will serve as a Senior Managing Director and Vice Chairman, managing Business Development and Investor Relations at Apogem as well as serving on several of the firm’s investment committees.
“I’m excited to be a part of Apogem’s leadership team and to help grow the firm’s well established middle market focused investment platform. The middle market represents an important portfolio exposure for institutional investors but has been a segment that has been difficult to navigate due to the sheer number of firms and the wide dispersion of outcomes. Apogem is uniquely positioned as it applies decades of collective investment experience through multiple business cycles, key market relationships and proprietary data to its investment programs in middle market private equity and private credit,” said David Fann.
Prior to joining Apogem, Fann served as Vice Chairman and Partner of Aksia, where he was involved with the firm’s private markets offering and provided senior advisory support to Aksia’s client advisory and private market investment activities. Prior to Aksia’s acquisition of TorreyCove Capital Partners, Fann was co-founder, President and Chief Executive Officer of TorreyCove Capital Partners. Previously, Fann was the President and Chief Executive Officer of Pacific Corporate Group Asset Management.
Fann received a BAS in Industrial Engineering and Economics (dual degree) from Stanford University. He currently serves on the Honorary Advisory Board for the Association of Asian American Investment Managers and on the advisory board for the Robert H. Toigo Foundation.
About Apogem Capital
Apogem Capital was formed in April 2022 through the combination of PA Capital, Madison Capital Funding and GoldPoint Partners to create a singular and unified, world class private markets alternative investment firm. With approximately $39 billion in assets under management as of March 31, 2022, Apogem has the deep relationships, data, and history in the middle market to deliver innovative solutions to both clients and sponsors. Apogem Capital offers investors access to the middle market’s growth engine through investments in leading private companies and funds. The Firm manages a streamlined suite of capital solutions, including direct lending, junior debt, primary fund investments, secondary investments, equity-co-investments, GP stakes, private real assets and long/short equity. Apogem Capital is a wholly owned subsidiary of New York Life Insurance Company (“NYLIC”), through New York Life Investment Management Holdings, LLC (“NYLIM”).
Media Contacts
Allison Scott
Zef Vataj
Explore the current state of private markets and potential opportunity in the US middle market in Apogem’s inaugural mid-year outlook. Find inside: an overview of the macro environment and risks to returns, performance of private markets during prior recessionary periods, and the evolution of this segment since the Global Financial Crisis.
View Full Report Here.
New York, NY – Apogem Capital (“Apogem”) held a final close for PA Secondary Fund VI (the “Fund” or “PASF VI”) on June 30, 2022, with approximately $614 million in total commitments. The Fund exceeded its target fund size of $500 million and more than doubled the size of its predecessor fund. Apogem’s Secondaries Team, implementing the same investment strategy, is continuing to build a diversified portfolio of complex and traditional growth, buyout and turnaround investments in the North American middle market through negotiated secondary market purchases.
PASF VI is already capitalizing on the firm’s larger market presence as Apogem, a $39 billion private markets’ investment manager, through its expansive private equity sponsor relationships and increased deal flow generated by the broader platform. The team is aiming to facilitate deals with a research advantage, or a more limited competitive dynamic achieved through existing relationships.
“We believe our leadership position in the middle market is even stronger following the closing of the merger with PA Capital, Madison Capital and GoldPoint Partners,” said Michael Zeleniuch, Managing Director at Apogem Capital. “We offer innovative and timely solutions to LPs and GPs and believe our PASF VI program1, which represents almost $900 million in committed capital, has never been more relevant. The addressable universe of middle market LP and GP secondaries that we pursue continues to grow, and we feel we are exceptionally well positioned given our multi-decade history in the space.”
The Fund’s limited partner base consists of several new investors, including single family offices and pension funds, as well as many existing investors from the firm’s prior Secondary funds.
Chris Stringer, Interim CEO of Apogem said, “We are grateful for the support of our partners in this fundraise, and we are excited to continue delivering creative secondary market solutions well into the future.”
Apogem employees and the firm’s parent, New York Life, also made meaningful commitments.
About Apogem Capital
Apogem Capital was formed in April 2022 through the combination of PA Capital, Madison Capital Funding and GoldPoint Partners to create a singular and unified, world class private markets’ investment firm. With approximately $39 billion in assets under management as of March 31, 2022, we believe Apogem has the deep relationships, data, and history in the middle market to deliver innovative solutions to both clients and sponsors. Apogem Capital offers investors access to the middle market’s growth engine through investments in leading private companies and funds. The Firm manages a streamlined suite of capital solutions, including direct lending, junior debt, primary fund investments, secondary investments, equity co-investments, GP stakes, private real assets and long/short equity. Apogem Capital is a wholly owned subsidiary of New York Life Insurance Company (“NYLIC”), through New York Life Investment Management Holdings, LLC (“NYLIM”).
Media Contacts
Allison Scott
Zef Vataj
[1] Includes the PA Secondary Fund VI, LP fund vehicle as well as separate accounts invested alongside the fund.
Richmond, VA – PA Capital (“PA” or “Firm”), a leading private equity investor in the North American middle market, held final closes for two of its private equity funds earlier this year. The Firm closed its ninth flagship private equity fund, PA Small Company Private Equity Fund IX (“Fund IX”) at $473 million, above its $350 million target. The Firm also closed PA Small Company Co-investment Fund II (“Co-invest II”) at its $200 million hard cap.
Consistent with PA’s predecessor multi-manager funds, Fund IX invests with an emphasis on the lower end of the middle market, building a diversified portfolio of fund investments, co-investments, and secondary investments. Co-invest II seeks to capitalize on the firm’s co-investment deal flow generated through its deep GP relationships.
Chris Stringer, President of PA said, “We are excited to close two successful fundraises and are grateful for the continued support of our LPs. Both funds are demonstrating strong results out of the gate implementing the strategy and process we’ve refined over the last 20 years.”
PA’s private equity program has continued to find value in today’s private equity market while remaining focused on generating returns through business building strategies instead of financial leverage. In a period of record high valuations, PA’s strategies have continued to find what the team believes are attractive opportunities at below market purchase multiples. The two funds’ limited partner base consists of new and existing institutional investors including pension plans, foundations, endowments, insurance companies, and family offices. PA employees and the firm’s parent organization, New York Life, also made meaningful commitments.
About PA Capital
PA is a specialized private investment firm managing over $7 billion in assets across private equity, private real assets, and long/short equity.1 PA provides access to the middle market through targeted portfolios of fund investments, secondaries, and direct co-investments. The firm’s competitive advantages are a result of 20+ years of dedicated middle market focus, enabling its team to build relationships, proprietary data sets, and specialized underwriting tools. PA is a wholly owned subsidiary of New York Life Investments Alternatives LLC, which is a wholly owned subsidiary of New York Life Insurance Company through New York Life Investment Management Holdings, LLC.
Media Contacts
Allison Scott
Kate Sylvester
[1] Estimated as of December 31, 2021
Each quarter, we survey managers across the New York Life Investments platform to gather views, identify priority themes, and pressure-test investment ideas.
The rapid return of abundant liquidity and high valuations in private markets has been a focus for our U.S. managers. Despite the likelihood of modestly rising interest rates in the coming years, factors driving demand for private asset classes are likely to endure, raising concerns about future sources of return.
The story is slightly different in Europe where decentralization, geographic fragmentation, and a still-maturing market provide ample opportunity to harvest an illiquidity premium, particularly in the mid- and lower-mid market.
While the illiquidity premium may be durably lower in some markets in years ahead, the business risk premium for investors is alive and well.
This piece examine show the oft-cited “search for yield” is playing out in a new economic cycle, how managers are adapting, and priorities for excelling in a highly competitive market.
View Full Report Here.
About New York Life Investments Alternatives
New York Life Investments Alternatives LLC (“NYLIA”) is a registered investment advisor that provides comprehensive capital solutions and other alternative strategies to a broad range of institutional clients. NYLIA is comprised of three highly specialized, alternative investing boutiques: GoldPoint Partners, Madison Capital Funding, and PA Capital, collectively managing over $35 billion in assets, as of 7/31/21.*