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

allison_scott@nylim.com

Zef Vataj

zvataj@sloanepr.com

[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 

allison_scott@nylim.com

Kate Sylvester 

ksylvester@sloanepr.com

[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.*

Southlake, TX – Gauge Capital (“Gauge” or the “Firm”), a leading growth-oriented middle market private equity firm, is pleased to announce that RidgeLake Partners (“RidgeLake”) has made a strategic investment in the Firm. Specific terms of the transaction were not disclosed.

The investment from RidgeLake, a partnership between PA Capital and Ottawa Avenue Private Capital that focuses on acquiring minority equity stakes in middle market private equity firms, is expected to support the future growth of Gauge and its investment activities across the healthcare, technology, business services, government & industrial services, and food & consumer sectors. There are no planned changes in Gauge’s investment processes nor day-to- day management of the Firm.

“We are excited to have RidgeLake as a strategic long-term partner for Gauge through the next phase of our firm’s growth,” said Drew Johnson, Co-Founder and Managing Partner of Gauge. “The RidgeLake team brings over 40 years of combined experience as a value-added investor and capital partner to leading private equity firms. We believe their thought leadership in the middle market makes them an ideal strategic partner as we strive to deliver superior returns for our investors,” commented Tom McKelvey, Co-Founder and Managing Partner of Gauge.

“Having known Gauge since their inception, we have witnessed their historical ability to deliver outstanding performance through a long-term, sustainable approach to value creation. We believe Gauge is well-positioned to capitalize on the growth opportunities emerging within their targeted sectors for years to come,” said Todd Milligan, Co-Head of RidgeLake Partners. “As the largest investor in their own funds, Gauge has built strong alignment with their investors, portfolio companies, and employees. We are excited to help Gauge further strengthen this alignment going-forward,” added Michael Lunt, Co-Head of RidgeLake Partners.

About Gauge Capital

Gauge Capital is a leading middle-market private equity firm based in Southlake, Texas. Gauge invests in five key sectors: healthcare, technology, business services, government & industrial services, and food & consumer. The firm manages over $2.0 billion in capital and in 2020, Inc. Magazine named Gauge one of the top 50 private equity firms for founders. In 2021, Gauge was also named to the Top 50 PE Firms in the Middle Market by Grady Campbell. For more information, please visit: www.gaugecapital.com

About RidgeLake Partners

RidgeLake Partners is a strategic partnership between PA Capital and Ottawa Avenue Private Capital focused on acquiring minority equity stakes in successful middle market private equity firms. RidgeLake seeks to partner with firms focused on buyout, growth, distressed, secondaries or real assets strategies across the private markets. RidgeLake forges long-term relationships with its GP partners, and brings strategic counsel borne from more than 40 years of combined middle market investment experience.

Q3 2021 – The COVID-19 crisis forced middle market private equity sponsors to make rapid changes to core business and investment processes to keep their businesses running and their portfolios intact. Because many of these changes proved successful under the most trying circumstances, some will remain in place long after the pandemic recedes, permanently altering the industry.

To better understand how the crisis affected the middle market private equity industry, and how sponsors responded to COVID-19-related challenges, New York Life Investments Alternatives (NYLIA) partnered with Coalition Greenwich to conduct more than 100 in-depth interviews with senior professionals at U.S. middle market private equity sponsors.

This report presents the complete results of that research, including an assessment of the most important changes triggered by the crisis across core functions such as investing, deal sourcing, transaction financing, exit strategies, and fundraising. It also provides a deep analysis of which changes will persist into the post-pandemic era, as well as key learnings, including:

  • A sharpening of the investment process
  • New ways of using technology
  • The importance of relationships
  • Opportunities in ESG and DEI

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.*

Buffalo, N.Y.  – Summer Street Capital Partners, LLC (“Summer Street”) is pleased to announce the closing of a continuation fund transaction, continuing Summer Street’s control ownership in Coastal Waste & Recycling, Inc. (“Coastal”), and reaffirming its commitment to supporting the company’s long-term growth strategy.

Summer Street partnered with PA Capital to form a Summer Street managed single-asset continuation fund that includes substantial additional capital to support Coastal’s organic and M&A growth strategy. The fund is capitalized primarily by funds managed by PA Capital and co-investors, Glouston Capital Partners, and Unigestion. Coastal remains a portfolio company of Summer Street with no change in control. Summer Street’s leadership team also expanded its investment commitment to the new continuation fund.

Founded in 2017 by Summer Street and CEO, Brendon Pantano, Coastal is an integrated waste services company providing waste collection, processing, and recycling services to residential, municipal, industrial, and commercial customers throughout Florida and expanding in the Southeast region. Over the past few years, Coastal has significantly expanded its operations and geographic footprint through organic growth and the completion of 14 acquisitions. Today the company operates 11 facilities across its footprint, employing over 450 people and operating over 250 trucks.

“With a talented, energetic team and substantial long-term growth opportunity in front of Coastal, it was a natural next step to raise additional capital,” commented Brian D’Amico, Managing Partner at Summer Street Capital. “The new fund provides Coastal the capital and time to continue its growth. We are excited to continue to support Coastal and help the leadership team capitalize on the many opportunities that exist for the company.”

“Since we started the company a few years ago, Coastal has established itself as a leading independent waste services company in Florida. Summer Street’s deep industry experience and support has allowed us to build a strong platform focused on providing exceptional service for our customers,” said Brendon Pantano, CEO of Coastal. “I look forward to continuing the partnership and further accelerating Coastal’s growth organically and through acquisition.”

Managing Director at PA Capital, Michael Zeleniuch stated, “We believe Summer Street has a strong 20- year track record of building leading regional solid waste platforms. We are excited to partner with Summer Street and the Coastal Waste team as they continue to build lasting value in the platform.”

Sixpoint Partners served as Summer Street’s exclusive financial advisor on the transaction. Terms of the transaction were not disclosed.

More information on Coastal Waste & Recycling can be found at www.coastalwasteinc.com.

About Summer Street Capital Partners

Summer Street Capital Partners, LLC, founded in 1999, is a Buffalo, NY-based private equity fund manager with committed capital focused on investing in small and middle-market companies in manufacturing as well as business and environmental services. The firm is a leading investor in the environmental services sector, with nearly 20 years of experience acquiring and building companies in waste collection, transportation, and disposal across the eastern United States. Summer Street’s investments support management buyouts, family transitions, corporate divestitures, growth financings, and recapitalizations. Visit www.summerstreetcapital.com for additional information.

About PA Capital

PA Capital (formerly known as Private Advisors) is a specialized private investment firm managing over $6 billion in assets as of June 30, 2021. The firm provides access to the Low Mid Market, investing in Private Equity, Private Real Assets, and Long/Short Equity and constructing targeted portfolios of fund investments, secondaries, and direct co-investments. PA Capital’s competitive advantages are a result of 20+ years of dedicated focus on the Low Mid Market, enabling the team to build strong relationships, proprietary data sets, and specialized underwriting tools. PA Capital LLC is a majority-owned subsidiary of New York Life Investments Alternatives LLC, a wholly owned subsidiary of New York Life Insurance Company through New York Life Investment Management Holdings, LLC. www.pacapital.com

New York – Sentinel Capital Partners, a private equity firm that invests in promising midmarket companies, today announced a strategic partnership led by funds managed by Blackstone’s GP Stakes business (“Blackstone”) and including RidgeLake Partners (“RidgeLake”). As investors with deep experience partnering with top-tier private equity firms, Blackstone and RidgeLake take a long-term approach to collaborating with general partners. Blackstone and RidgeLake are providing primary equity capital as minority investors.

Blackstone’s GP Stakes business specializes in value-added, long-term partnerships with leading private-market alternative asset managers. The partnership will give Sentinel’s portfolio companies access to Blackstone’s group purchasing programs, which leverage the buying power of the $150 billion revenue base across Blackstone’s entire investment platform. Sentinel will also be able to draw from a wide range of other services Blackstone provides internally and to its portfolio companies, including sustainability, ESG and cybersecurity.

The investment from RidgeLake, a partnership between PA Capital and Ottawa Avenue Private Capital, will give Sentinel access to additional sources of potential deal flow and industry know-how. RidgeLake brings more than 40 years of experience as an active private markets investor and industry thought leader in the middle market.

“In Blackstone and RidgeLake, Sentinel has partnered with two outstanding firms that we believe bring significant strategic value,” said John McCormack, Co-Founder and Senior Partner. Added David Lobel, Sentinel’s Founder and Managing Partner, “Blackstone is sharing with us the resources of its extraordinary platform, which we expect to bring tangible advantages in terms of value creation and proprietary intellectual capital. And RidgeLake’s broad network and unique set of industry relationships open new possibilities for expanding our deal flow and augmenting our operating capabilities. These exciting enhancements have the potential to position Sentinel to create additional enterprise value for our portfolio companies, access untapped deal flow sources, and use balance sheet capital to pursue opportunistic investment opportunities.”

“Sentinel has established a stellar reputation since its founding and has a track record that has placed it at the top of its competitive space. We are delighted to be entering into this partnership with the Sentinel team,” said Mustafa M. Siddiqui, Head of Blackstone’s GP Stakes business. “Our partnership will help Sentinel access a broad set of strategic opportunities and enhance their ability to deliver attractive investment returns,” added Ward Young, a Managing Director at Blackstone.

“Over 25 years, Sentinel has built an impressive private equity team, with what we view as an exceptional track record,” said Michael Lunt and Todd Milligan, Co-Heads of RidgeLake Partners. “Sentinel’s prudent investment approach has stood the test of time, and we believe the firm will continue thriving in the years ahead. We look forward to partnering with them to further extend their network of relationships in the market.”

About Sentinel Capital Partners

Sentinel specializes in buying and building midmarket businesses in the United States and Canada in partnership with management. Sentinel targets aerospace and defense, business services, consumer, distribution, food and restaurants, franchising, healthcare, and industrial businesses. Sentinel invests in management buyouts, recapitalizations, corporate divestitures, going-private transactions, and structured equity investments of established businesses with EBITDA of up to $80 million. Sentinel also invests in special situations, including balance sheet restructurings, operational turnarounds, and minority junior capital solutions. For more information about Sentinel, visit www.sentinelpartners.com.

About Blackstone

Blackstone is the world’s largest alternative investment firm. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, and the communities in which we work. We do this by using extraordinary people and flexible capital to help companies solve problems. Our $684 billion in assets under management include investment vehicles focused on private equity, real estate, public debt and equity, life sciences, growth equity, opportunistic, non-investment grade credit, real assets and secondary funds, all on a global basis. Further information is available at www.blackstone.com. Follow Blackstone on Twitter @Blackstone.

About RidgeLake Partners

RidgeLake Partners is a strategic partnership between Ottawa Avenue Private Capital and PA Capital, an affiliate of New York Life Investments Alternatives, focused on acquiring minority equity stakes in top-tier midmarket private equity firms. RidgeLake partners with firms focused on buyout, growth, distressed, secondaries or real assets strategies across the private markets. RidgeLake seeks to forge long-term relationships with its general partners, and brings strategic counsel borne from more than 40 years of combined midmarket investment experience.

Alternatives manager PA Capital – formerly known as Private Advisors – and Ottawa Avenue Private Capital have teamed up to launch a GP stakes strategy. The strategy, named RidgeLake Partners, is equally seeded by PA’s parent company New York Life Insurance Company and OAPC’s affiliate RDV Corporation for a combined $500 million. RDV is the family office of Richard DeVos, father-in-law to US Secretary of Education Betsy DeVos.

PA Capital and OAPC have established a team of investment professionals from across the two organizations, co-led by Michael Lunt and Todd Milligan, to focus on RidgeLake, with broader investment and operational support provided by both firms.

OAPC, which manages more than $13 billion of assets, a minority of which is third-party capital, has been involved in GP stakes investments since 2015 and made six investments. In September it acquired a passive minority interest in Scandinavian private equity firm Nordic Capital.PA Capital and OAPC have worked alongside each other as limited partners since 2001, and OAPC has invested in PA Capital fund vehicles.

RidgeLake focuses on acquiring minority equity stakes in “top tier” mid-market private equity management companies across buyout, growth, distressed private equity, secondaries and real assets, focusing on those with $1 billion-$10 billion in assets under management.“

Just like in traditional private equity investing, our view is LPs don’t often exclusively invest in larger mega-cap private equity, they typically also invest in lower and middle market strategies for diversification,” Milligan, managing director in private equity at PA Capital, told Private Equity International. “We think that the same complementary exposure applies here for GP stakes.”

RidgeLake aims to leverage more than 250 GP relationships it has collectively across PA Capital, OAPC and across the New York Life Investments Alternatives platform, of which PA Capital is one of three subsidiaries. This focus on the mid-market and breadth of GP relationships is what differentiates RidgeLake from other GP stakes players, which in the main have focused on the large-cap space, Milligan added.

Addressing a Capital Need

Fundraising and investment success have created a need for growth capital among such firms, said Lunt, managing director at OAPC. “These firms are often institutionalising or further institutionalising their business; they may be launching an adjacent strategy or perhaps opening a new office or, almost equally important, with success they’ve grown the size of their funds, and the partners in the firm want to keep making that same level of commitment to their own funds,” Lunt said. “This capital in the GP stakes market can be used for any of those growth capital purposes, including to help fund the GP commitments of the founding partners, or that next generation of investors and other team members at these firms. ”The intention is to hold these minority equity stakes on a long-term basis with no set plan for exit. “It’s hard to know with certainty what liquidity solutions will look like many years out into the future,” Milligan said. “Like all the other markets in the private asset class, we think this market will evolve over time too, and there will be liquidity solutions that may present themselves, but it’s hard to speculate today as to what shape or form they may take hold when we’re talking about long-term holds for these assets.” Milligan and Lunt declined to comment on return expectations for the fund.

According to an analyst note from PitchBook, firms targeting GP stakes
in the mid-market typically underwrite investments at a net internal rate of return of 20-25 percent and a 2.5-3.0x multiple on invested capital. Last year Investcorp launched a GP stakes arm, its Strategic Capital Group, and is seeking $750 million for its debut fund for the strategy which also focuses on the mid-market. In a white paper published in May, the Bahrain-headquartered firm estimated the potential size of the market for minority stakes in GP management companies to be around $90 billion, which represents the total enterprise value of alternatives managers that have raised between $1 billion and $10 billion over the last decade.

PitchBook notes that supply and demand in the mid-market favours GP stakes firms; more than 400 GPs have raised between $2 billion and $8 billion in the past decade without any backing. PitchBook also posits that covid-19 could “tilt the odds further in the favour” of these firms. “A reduction in portfolio company valuations is likely to lead to fewer realisations in the next few years, delaying and possibly reducing carry payments to GP management. This means firms without healthy reserves of capital will struggle to finance GP commitments on upcoming funds,” the note reads. “Middle- market GPs may also seek to expand into new strategies post covid-19, making strategic capital and advice even more important.”

About RidgeLake Partners

RidgeLake Partners is a strategic partnership between PA Capital and Ottawa Avenue Private Capital focused on acquiring minority equity stakes in successful middle market private equity firms. RidgeLake seeks to partner with firms focused on buyout, growth, distressed, secondaries or real assets strategies across the private markets. RidgeLake forges long-term relationships with its GP partners, and brings strategic counsel borne from more than 40 years of combined middle market investment experience.