Firms seek to ID patterns to build just the right LP base
This week Buyouts broke news that Cove Hill Partners , a firm that employs long-hold flexibility, closed its third fund over target after just three months in the market.
That’s pretty impressive considering the current fundraising environment, made especially tough amid a dearth of exits and a slowdown in distributions, forcing LPs to downshift their commitment pace to new funds.
This is especially true for emerging managers, which are having (as usual) a tough time enticing capital from LPs. Many of them are employing strategies like seeded portfolios, in which they source capital for one-off deals that LPs can scrutinize before actually making a full-fledged commitment.
But not every firm is facing this type of slog.
Cove Hill has shown how it’s done. Considering this is Fund III, the firm, formed in 2017, is quickly moving out of the “emerging manager” category. It’s been able to maintain steady growth by sticking to its core competencies, engaging in some exit activity despite the long-hold nature of its funds and carefully nurturing its “tight, loyal” group of LPs. That group accounted for most of Fund III’s $1.9 billion tally, a source told Buyouts.
Performance also matters, as always. While hard numbers were not available (or disclosed by the firm), an LP told me...