TwinFocus Capital Partners, an investment advisory firm, has hired former Harvard Management Company private equity executive Orlando Mendoza to launch a co-investment platform.
Mendoza, who has already started working at TwinFocus, is based in the firm’s Boston office. He spent two years working as a vice president at Harvard Management Company, and prior to that, seven years at Edison Ventures, which invests in expansion-stage technology companies.
TwinFocus’s clients are mostly high net-worth individuals, though Mendoza has relationships with institutions. Target clients for the co-investment strategy are mostly smaller pension funds, large global insurance companies and large corporate limited partners, Mendoza said.
In the early going, the co-investment strategy will focus on lining up one or two select LPs to participate in one co-investment, though the plan is to expand that so eventually TwinFocus will be able to marshal capital from a handful of LPs into a deal, Mendoza said.
We're not interested in sitting in an investment for eight to 10 years.
The firm will charge, on average, a 1 percent management fee and 10 percent carried interest rate, he said.
TwinFocus will invest as low as $5 million and as high as $40 million, Mendoza said. “Our sweet spot is between $10 million and $20 million,” he said.
Also, liquidity is an important factor in the deals, Mendoza said. He would like to stay invested in a deal for three to five years and then exit.
“[We need to see] a realistic exit plan when we invest,” he said. “We’re not interested in sitting in an investment for eight to 10 years.”
The firm already has a pipeline of seven deals, with three on which it is performing due diligence, Mendoza said. TwinFocus has “shied away” from 10 other deals, he said.
“We’re only looking for companies that have at least 30 to 35 percent revenue growth, 50 percent profit margin. It needs to be trending up,” Mendoza said. “If it’s not, it’s not our cup of tea.”