Marwit closes second fund on $183m(2)

The Californian firm has closed its first institutional fund, which will make microcap investments in family owned business in the Western US.

Californian Marwit Capital Partners has held a final close on $183 million (€134.5 million) for its second fund. The fund will target the lower middle market, particularly in California, and seek to make investments of between $10 million and $20 million in family-run businesses.

Marwit Capital Partners II is the firm’s first institutional fund. The firm’s previous fund, which closed on $48 million in 1995, was backed by “family and friends”, said Seth Wohlberg, a managing director at Far Hills Group, Marwit’s placement agent. But now that the firm has matured, Wohlberg said, the new fund was developed specifically with the institutional investment community in mind.

Fundraising took around twelve months, Wohlberg said, and the fund exceeded its initial target of $175 million. Its LPs include fund of funds Banc of America Capital Access Fund, Sigular Guff, WP North American Private Equity, COREalpha Private Equity Partners, The Lincoln National Life Insurance Company, City National Bank, CUNA Mutual, The Meadows Foundation, Arlington Partners, Cornerstone Private Equity Partners V and Keystone Private Equity. Marwit’s GPs committed $5 million to the fund as well.

Far Hills saw considerable demand while marketing Marwit’s new fund, Wohlberg said.

“There is big interest in lower middle market buyouts right now,” he said. “In this sector, there’s more inefficiency; there is an ability to attract businesses on more favorable terms, and an increased ability to add a lot of value in a more immediate manner.”

The fund has already made four investments, and all of those deals were closed were closed on a non-auction basis, Wohlberg said. Last year Marwit bought Texas breast care clinic chain Women’s Diagnostic for $14 million, California dairy processor Driftwood Dairy for $22 million and California nutritional food maker Promax Nutrition Group for $7.2 million. This year the fund invested $7 million in Utah vinyl fence installer and distributor Best Vinyl. Marwit ultimately expects the new fund’s portfolio to have 12 to 15 companies.