Charlesbank Progresses Toward $3.25 Billion Goal for New Flagship Fund

Midmarket private-equity firm Charlesbank Capital Partners is picking up commitments for its 10th flagship vehicle and a related overage fund, after corralling almost $1.4 billion across its debut technology and second credit funds earlier this year.

The Boston-based firm is seeking $3.25 billion for Charlesbank Equity Fund X LP, which has an upper limit of $3.75 billion, according to documents prepared for the Rhode Island State Investment Commission, which oversees an $8.68 billion state pension system.

The Rhode Island pension manager committed a total of $40 million to the new flagship funds. Charlesbank itself is expected to contribute at least $130 million to the pools, the pension documents said.

Other investors that have disclosed commitments to the new flagship fund this year include the San Antonio Fire and Police Pension Fund, Tennessee Consolidated Retirement System and the endowment for University of Vermont State and Agricultural College.

Should the firm reach its goal, the new fund would be more than 36% larger than the $2.75 billion investors committed to Charlesbank Equity Fund IX LP and a related overage fund, which closed in 2017.

Charlesbank was founded in 1998 by five partners who previously managed the investment portfolio for the Harvard University endowment at Harvard Private Capital Group. The firm added a credit strategy to its portfolio in 2016 and a technology strategy in 2019 that focuses on lower midmarket tech investing, according to its website.

The firm closed on $700 million of investor capital for Charlesbank Credit Opportunities Fund II LP in July and $700 million for its debut Technology Opportunities Fund in January.

The new Charlesbank flagship fund will invest in midmarket companies with enterprise values between $150 million and $3 billion in the business services, consumer, industrial, health-care and technology sectors. The firm aims to make initial equity investments of $100 million to $300 million, according to separate due diligence documents presented in October to the City of Hartford Pension Commission, which is also considering a commitment to Fund X.

The overage fund will invest alongside the flagship vehicle in companies that require more than $300 million of equity investment, the Rhode Island pension documents said.

The overage fund will charge carried interest but not a management fee, the documents said.

Charlesbank didn’t respond to requests for comment on the fund.

Charlesbank, which is still investing from its ninth flagship vehicle, generated a 1.1 times net return on investment for the fund as of June 30, according to the Rhode Island documents.

The firm manages more than $7.4 billion of assets across the three strategies, the Rhode Island documents said.

Source: Wall Street Journal