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Alpine to focus on carve-outs, add-ons with new $1 bln fund

The San-Francisco firm closed its latest fund, Alpine VII, on a hard-cap of $1 billion, exceeding its $750 million target.

Alpine Investors will focus on carve-outs and add-on acquisitions with its new fund, founder and CEO Graham Weaver told Buyouts.

The San-Francisco firm closed its latest fund, Alpine VII, on a hard-cap of $1 billion, exceeding its $750 million target, the firm announced on Nov. 14.

For the first time, investors from Europe and Asia also committed to the fund, which has been fundraising since early 2019, Weaver said.

The new fund will continue Alpine’s focus on middle-market software and services companies in the U.S. and give the firm the ability to focus on bigger deals. “With this fund we are accessing larger businesses up to $400 million in value, particularly carve-outs,” Weaver said.

A primary focus of Fund VII—about 60 percent of the fund—will be add-ons. Alpine wants to put more money behind its best-performing portfolio companies, Weaver said.

“We will invest more money in add-ons than we will in platform companies,” Weaver said. “Add-on investments historically have been our best returning capital, as they back our best ideas. In addition, [add-ons] are typically less expensive.”

The firm made two add-on investments out of Fund VII through its vertical software aggregate platform ASG. In September, ASG acquired an operations management software business Transcendent. The other investment is about to close, Weaver said.

Thematically Alpine will continue investing and building out its software and services platforms.

Alpine made two platforms with Fund VII: Midwest Vision Partners, an ophthalmology services business, and Apex Group, an HVAC, plumbing and electrical services platform, in June and July, respectively.

Within software, the firm will target opportunities in property management and on companies in the tracking and logistics space. As part of its services theme, Alpine will be actively sourcing deals in ophthalmology services and in the HVAC and plumbing services market.

Nearly half of the $1 billion fund will be allocated to opportunities in software, 30 percent of which will be dedicated to ASG, Weaver said. Another half of the fund will be allocated to services, he said.

Alpine’s previous fund, Alpine VI, closed on its hard cap of $532 million, in June 2017. Alpine VI is almost fully deployed, Weaver said.

Action Item: Read more about Alpine’s software strategy in the Q&A with Mark Strauch.