Oregon boosts Alvarez & Marsal debut

Alvarez & Marsal Capital Partners’ $500m debut vehicle picked up a $100m commitment from the Oregon Investment Council at its meeting Wednesday.

The Oregon Investment Council has approved a $100 million commitment to Alvarez & Marsal Capital Partners’ debut fund, according to a council spokesperson. 

Professional services firm Alvarez & Marsal formed its private equity affiliate after Lehman Brothers’ private equity chief Michael Odrich teamed with Jack McCarthy, an A&M partner who had been tasked with “repositioning Lehman’s complex private equity business”, according to Oregon state documents. 

The pair later joined with Kurt Kaull, formerly of Gryphon Investors, to launch A&M Capital Partners in 2009. 

The firm’s debut fund is targeting $500 million with a $600 million hard-cap for investments in small and mid-market companies. The firm’s primary focus will be on the US market, but as many as 20 percent of its investments may be European. 

The fund will invest in 12 to 18 undermanaged business services, consumer, retail, industrial and healthcare companies, as well as other industries on a limited, “opportunistic” basis, according to Oregon documents. 

“The affiliation with Alvarez & Marsal promises a stream of truly differentiated and proprietary deal flow, and a deep and experienced pool of resources that can be extremely helpful in executing the Fund’s operational improvement strategy in distressed or undermanaged companies,” according to an Oregon investment staff memo.

Furthermore, A&M has offered a relatively low management fee of 1 percent with 10 percent carried interest. All transaction fees are used to offset the management fee, according to Oregon.  

“These positive factors appear to more than compensate for the marginally higher start-up and execution risks with the first time fund.”

Scott Richter, Evercore, Triple A Partners and JM Capital have been engaged as placement agents for the fund, according to Oregon documents.