Avante Capital beats target, raises $450m

Firm headed by women raised its hard-cap from $400m due to investor demand.

Avante Capital Partners, a private credit and structured equity firm founded 13 years ago, has completed the close of its third mid-market fund, Avante Capital Partners SBIC III, LP; and Avante Capital Partners SBIC III-A, LP (collectively Fund III).

Ivelisse Simon, managing partner, told Private Debt Investor that the target was $300 million with a hard-cap of $400 million. However, there was so much interest that Avante raised the hard-cap to $450 million. 

“We could have raised $700 [million], perhaps $800 million,” Simon added. “But that would not have been the optimal size. We wanted to be able to make use of this money.” 

Fund III is an SBIC-backed  fund with leverage of $175 million from the SBA. Avante has already committed $140 million of the capital. The fund comes with both a management fee and an incentive fee, and an 8 percent hurdle rate. Fund III is targeting returns in the mid to high teens on a levered basis. 

Avante’s investor base has been evolving. Investors in the latest fund include Caisse de dépôt et placement du Québec, the Quebec deposit and investment fund, which manages several pension and insurance plans for the province. Other institutional investors in Fund III include Cigna, the endowment of the University of Pittsburgh, and PNC, according to Simon.

The predecessor fund closed in 2015. Fund III held its first close in spring 2021. “Between Fund II and Fund III, we’ve doubled the number of investors,” Simon observed. Investors new to the firm include insurance companies and endowments. We always did have banks and family offices, but now we have more of both.”

Fund III is, as the name suggests, Avante’s third top-tier fund. Each fund has followed the same strategy: lending to lower mid-market businesses with EBITDA of between $3 million and $20 million. The funds have a range of positions in the debt structure of their companies, from senior to subordinated. 

Avante, which is 100 percent women owned, is interested in, but not exclusively focused on, providing capital to businesses that are women or minority owned. The typical portfolio investment is between $7 million and $45 million per transaction.

Avante does not follow a distressed strategy. It is looking for positions in healthy, established companies with private equity backing, and a defensible market niche or competitive advantage within non-cyclical industries. It looks to support PE sponsors in buyout transactions, recapitalisations, refinancings and the like. Among the industries it invests in are healthcare, business services, education, software and niche manufacturing.

Avante, located in Los Angeles, has AUM of $918 million. The firm showcases its internship programme. It has 40 interns, “all of whom are women or people of colour or both”, Simon said. ”We are filling the pipeline of diverse professional access to our industry.”