One middle-market private equity firm is on a roll raising money.
Monomoy Capital Partners plans to add a new fund to its war chest after it closed two in the past two years.
The New York-based manager is preparing to raise its latest PE fund, aiming to collect around $1.6 billion to invest in industrial and distribution businesses, according to a person familiar with the matter.
The person, who spoke on the condition of anonymity, said Monomoy could be launching the vehicle by the end of this year.
If it hits its fundraising target, the flagship fund would mark a roughly 45% step-up from its predecessor, Fund IV, which closed on more than $1.1 billion in 2021.
Monomoy targets middle-market companies in the industrial and consumer sectors in North America. Its portfolio includes direct-mail marketing specialist Japs-Olson and construction materials manufacturer Cast-Crete.
Fund IV generated a 46.32% net IRR as of Q1 2023, according to a report from the School Employees Retirement System of Ohio.
Monomoy also operates a credit strategy. The firm said Sept. 7 it had wrapped up a $300 million vehicle, Monomoy Credit Opportunities Fund II, to target secondary investments in first-lien term loans and senior secured notes in middle-market and lower-middle-market companies.
The firm did not respond to requests for comment.
Monomoy’s preparations for the fundraise comes at a time when mid-market PE funds, which fall between $100 million and $5 billion in size, have been outperforming their larger counterparts.
In the first half of this year, US fund managers amassed $78.5 billion for mid-market funds, accounting for 60.4% of the total capital raised across all PE funds, according to PitchBook’s Q2 2023 US PE Middle Market Report. Fundraising for these vehicles is on pace for its best year ever, the report said.
Size may also be negligible in determining performance. In a new PitchBook scoring system measuring PE fund performance, numerous boutique investment firms beat their larger peers.
Monomoy’s buyout fund family captured first place in the ranking, while lower-middle-market firm Clarion Investors occupied the runner-up position. Other mid-market managers with top-ranked fund families in the results included Hudson Ferry Capital and Incline Equity Partners.
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