Evolution buys into mortgage lender

The firm, founded in 2005, is investing from its $20m debut fund, which is about 80% invested. Evolution plans to raise a second fund.

Evolution Capital Partners, a fledgling firm based in Cleveland, Ohio, has invested in mortgage lender American Eagle Mortgage, the fifth investment from the firm’s debut $20 million fund.

The firm, founded in 2005, did not release details of the transaction, but a spokesperson said the investment gives Evolution a “significant stake” in the company.

American Eagle Mortgage operates in Ohio, Kentucky and Florida, and has “avoided the aggressive lending practices associated with sub-prime lending”, the firm said in a statement.

Evolution’s investments range across a wide swath of industries, including paper products manufacturing, education, chemical distribution and title insurance. The firm bases its investments on the quality of management teams and the growth potential of companies, the spokesperson said.

Evolution looks to invest $1 million to $10 million of equity in partnership with management to sponsor buyouts of light industrial, service and distribution businesses. It targets businesses with annual sales between $5 million and $50 million.

Evolution uses low leverage in its deals, the spokesperson said.

Limited partners in the debut fund include institutions and wealthy individuals. The fund is about 80 percent invested, according to the spokesperson, and Evolution has plans to raise a second fund, though it’s not clear when fundraising will begin.