Arctos closes in on halfway point for $2.5bn second sports fund

The specialist firm, which takes minority stakes in sports teams and franchises, raised the largest debut private equity vehicle last year.

Arctos Sports Partners has raised nearly half of its sophomore fund and related vehicles, just seven months after raising the largest debut fund in private equity history.

The Dallas-headquartered firm has held a first closing on Arctos Sports Partners Fund II and its feeder and co-investment vehicles on over $1.1 billion against a $2.5 billion target, according to documents seen by Private Equity International.

About half of Fund II’s LP base backed its $2.9 billion debut vehicle and account for approximately 90 percent of the fund’s current capital commitments, the documents show. A second closing is expected in the coming weeks.

Investors in Fund I include Employees Retirement System of Texas and New Mexico Educational Retirement Board, PEI data shows.

Arctos Fund I has picked up stakes in sports franchises including in the National Basketball Association’s Golden State Warriors, Fenway Sports Group (owner of the Boston Red Sox, Liverpool Football Club and Pittsburgh Penguins), Los Angeles Dodgers, Chicago Cubs, Tampa Bay Lightning and San Francisco Giants.

The vehicle has delivered a 1.3x gross and 1.2x net multiple on invested capital as of April, the documents show.

Sportico first reported on the fundraise.

Arctos was founded in 2019 by Ian Charles, a former partner with secondaries firm Landmark Partners, and David O’Connor, the former chief executive of Madison Square Garden Company, which owns the New York Knicks basketball team and the New York Rangers hockey team.

The firm takes passive minority stakes in professional franchises and provides liquidity and growth capital to sports franchise owners and governors. It writes equity cheques of between $20 million and $400 million and focuses on North American and European sports leagues.

The sports sector has attracted private equity’s biggest names including CVC Capital Partners,  Silver Lake and KKR. Sports-dedicated investment firms including RedBird Capital Partners and Blue Owl Capital‘s Dyal HomeCourt Partners are also active buyers.

A spokesman for Arctos declined to comment for this article.

– Rod James contributed to this report.