Abry boosts carry to 30% with new fund

The Abry Heritage Partners fund will focus on the lower mid-market, targeting deals between $20m and $50m.

Abry Partners has increased the carried interest on its latest fund, Abry Heritage Partners, to 30 percent, according to fund documents from the Los Angeles City Employees' Retirement System, an existing investor with Abry

The fund, which has a target of $525 million, has a 2 percent management fee and a 9 percent hurdle rate. The GP commitment will be about $20 million. The fund launched in May, according to a filing with the Securities and Exchange Commission dated 27 May.

This is a departure for the firm, as its previous funds – including Abry Partners VIII, which closed on $1.9 billion in 2014 – come with a 20 percent carry. 

While a 20 percent carry is typically the norm in the industry, some successful general partners manage to agree with limited partners to a higher carried interest, typically 25 percent to 30 percent, especially when raising a smaller fund, which generates lower management fees

With the new fund, the Boston-based firm will continue its strategy of investing in smaller mid-market companies in the media, communication, information and business service sectors but will target smaller deal sizes.

The flagship Abry Partners funds invest in transactions with deal sizes between $40 million and $175 million, while the Abry Heritage Fund will invest in transactions with deal sizes between $20 million and $50 million.

Abry Partners has a strong track record, with five out of its eight private equity funds in the first quartile, according to documents prepared for LACERS by its consultant Portfolio Advisors. 

Abry Partners VI, which closed on $1.35 billion in 2008, posted a 20.5 percent net internal rate of return and a 1.9X investment multiple as of 31 December, according to data from Portfolio Advisors.

LACERS has committed $10 million to the Abry Heritage Partners fund. Other investors include the Illinois Municipal Retirement Fund, Maine Public Employees Retirement System and the Los Angeles Fire and Police Pensions, which also committed $10 million

Abry was founded in 1989 by Andrew Banks and Royce Yudkoff. In 2012, the leadership of the firm was transitioned to Jay Grossman and Peggy Koenig, who have been with the firm for at least 20 years.