New Mountain Capital to launch minority strategy – exclusive

The firm will raise a 'strategic equity' fund targeting sectors similar to those of its flagship buyout vehicles, PEI understands.

New Mountain Capital, the US mid-market investor, is planning to launch a non-control strategy next year, Private Equity International has learned.

The New York-headquartered firm will raise a ‘strategic equity’ fund targeting minority stakes in sectors similar to those of its flagship buyout vehicles, according to a source familiar with the firm. Its existing strategy takes control positions in predominantly US “defensive growth” companies with enterprise values of $100 million to $1 billion, according to its website.

It is unclear how much the fund will target. New Mountain Capital declined to comment.

New Mountain has made a string of strategy expansions in recent years. It gathered around $850 million for New Mountain Guardian Partners II, its first non-listed direct lending vehicle, last year. The fund is already 85 percent invested and the firm is expected to return to market with Guardian Partners III in 2019, the source said.

The firm is also understood to nearing a final close on New Mountain Net Lease Partners, a 2017-vintage real estate fund that acquires property from a target company and leases it back over approximately 20 years.

New Mountain is investing its $6.1 billion New Mountain Partners V fund. The 2017-vintage vehicle is approximately one-third deployed across eight deals and the firm is expected to return to market with Fund VI in 2020.

New Mountain Partners II, a $1.5 billion 2004-vintage, had delivered a 1.9x investment multiple and 13.8 percent net internal rate of return as of 31 March, according to performance figures from the California Public Employees’ Retirement System. New Mountain Partners Fund III, a $5.1 billion 2007-vintage, stood at 1.9x and 13.6 percent.

Founded in 1999, New Mountain has around $22 billion in assets under management, of which $17.5 billion is in private equity. The firm has around 145 employees and an 88-strong investment team.