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McCarthy Capital nears target after Montana, Nebraska commitments

  • Omaha-based McCarthy targets $325 mln
  • Total to include $50 mln GP commitment
  • Nebraska, Montana among Fund VI limited partners

Recent commitments from the Nebraska Investment Council and Montana Board of Investments should put McCarthy Capital within reach of its sixth fund’s $325 million target.

McCarthy, a 30-year old firm based in Omaha, Nebraska, received up to $65 million in commitments from Montana and Nebraska in recent months. Montana finalized its $25 million commitment to the fund in December. Nebraska approved a $40 million allocation at its February meeting, which remains subject to legal negotiations.

As of November 12, McCarthy Capital Fund VI had raised around $213 million, according to an SEC filing. The filing lists Lazard Freres & Co as an associated broker/dealer on the fund.

McCarthy Capital professionals will commit approximately $50 million to Fund VI. The firm did not respond to requests for comment.

At $325 million, Fund VI would be McCarthy’s largest by a wide margin. Its next largest, a $200 million 2012 vintage vehicle, grossed a 20.5 percent internal rate of return and 1.4x multiple through December 31, according to an investment presentation obtained by Buyouts. The firm has also returned some LP capital recently, grossing a combined 5.4x on eight realized investments since January 2013.

In November, McCarthy Capital announced the sale of its stake in Benaissance, a healthcare software-as-a-service business. Two months prior, the firm sold its stake in Medical Solutions to Beecken Petty O’Keefe & Company and Heritage Group through a dividend recapitalization.

Even so, a majority of McCarthy IV’s and V’s investments remain unrealized. Just 22 percent of Fund V’s investments had been realized as of December 31, according to the presentation, while approximately two-thirds of the $125 million Fund IV is still in the ground.

McCarthy funds acquire control or substantial minority stakes in mid-market businesses located in the Midwest and “select regional markets,” according to the presentation. The firm invests in businesses with enterprise values of up to $200 million, with an average investment size between $10 million and $30 million.

Founded in 1986, McCarthy Capital is led by President and Managing Partner Patrick Duffy. Robert Emmert is also a managing partner at the firm.

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Photo: Professor Stephen Baenziger holds a stalk of wheat at the greenhouse of the wheat breeding program at the Nebraska university in Lincoln, Nebraska, May 5, 2008. REUTERS/Carlos Barria