Harvest Partners raises more than $750m for structured equity vehicle

The firm is seeking $800m for the investment vehicle, which will deploy $40m-$75m per transaction.

Harvest Partners has neared the hard-cap for its second non-control private equity investment vehicle, amassing $786.2 million, according to Securities and Exchange Commission regulatory filings.

The New York-based asset manager is raising up to $800 million for its Harvest Partners Structured Capital Fund II. The vehicle targets investments in senior equity or junior debt investments in North America-based companies.

A firm representative could not be reached for comment.

The fund will deploy between $40 million-$75 million per transaction in mid-market companies within four industry sectors: business services and consumer, healthcare services, industrial services, and manufacturing and distribution, according to the firm’s SEC disclosure. Businesses Harvest targets generally have yearly revenues of between $100 million and $1 billion.

The Harvest funds charge either a minimum management fee or 1.5 percent on committed capital early on in the fund’s life and then 1.5 percent on invested capital later in the vehicle’s life. Harvest funds generally charge up to 20 percent for carried interest over an 8 percent hurdle rate.

Harvest Partners, a mid-market private equity firm, launched its structured equity arm in 2015 to provide business owners access to capital that allowed those in control of the enterprise to remain at the helm.

“The vision for [Structured Capital Fund] was built on serving the demands of entrepreneurs and business owners who need equity capital, but believe in the upside of their business and do not wish to dilute or sell their ownership,” Jay Hegenbart, a former senior managing director who helped launch SCF, said at the time.

Structured equity funds have gained popularity as the credit cycle has moved along.

“You have credit funds coming down the cap structure and equity funds going up,” Heather Smith, a structured equity advisor at investment bank Houlihan Lokey, previously told Private Debt Investor. Private equity firms are raising structured equity funds to reduce equity risk, she added.

Harvest Partners’ private equity arm is currently investing out of its seventh flagship fund, which targeted up to $2.2 billion. Its private equity arm buys companies that have between $20 million-$100 million in EBITDA. It managed $5.08 billion as of 31 December.