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Cove Hill closes debut fund, with long duration, on more than $1 bln

  • Fund has longer hold periods than traditional PE fund
  • Debut beat original $850 mln target
  • LPs include families, endowments, foundations

Cove Hill Partners, the firm launched by former Bain Capital executive Andrew Balson, closed its debut, longer duration fund on more than $1 billion for consumer and technology investments, sources told Buyouts.

Cove Hill Partners Fund I held a so-called one-and-done final close at least 18 percent above its original target of $850 million, sources said.

The fund, which launched in April, generated a lot of interest among limited partners, sources previously told Buyouts. LPs included wealthy families, university endowments and charitable foundations, the firm said.

The fund has a 15-year life, plus extensions. But it also has a mechanism by which the firm can hold individual companies for an indefinite period of time, Balson said in an interview Thursday. The fund will have the same return profile as a traditional private equity fund, targeting top quartile net returns, Balson said.

“We are believers in building businesses for the long term and our structure provides us the flexibility to do that,” Balson said.

“I have been involved in many businesses that continue to prosper and grow over really long periods of time, particularly once we have worked with the team to bring clarity to the business plan, added resources that need to be added, and made investments in the business to grow it,” he said.

“We wanted to create a vehicle that had flexibility to enable us to hold these special companies for as long as we believe the risk/return is attractive. Fortunately, we have a group of investors who are aligned with our objectives and want us to hold investments to enable them to compound their returns over the long-term.”

The Boston firm plans to partner with management teams on investments, according to Cove Hill’s LinkedIn profile. With its capital pool, the firm expects to build a portfolio of about five to eight companies, its website says.

Balson was at Bain Capital from 1996 to 2013, starting as an associate and leaving as a managing director. He co-led the global PE investment committee process between 2011 and 2013.

Balson sat on the boards of Domino’s Pizza, Dunkin Brands and Bloomin Brands, which runs restaurant chains like Outback Steakhouse.

Prior to Bain Capital, he worked at Bain & Co.

In March, Cove Hill hired General Catalyst Partner Justin Roberts. Roberts was at General Catalyst for about a year; previously he worked at Thomas H. Lee Partners from July 2012 to April 2016. He also was an associate at TA Associates from August 2007 to August 2010.

Other executives include Lara Fox Moskowitz, co-founder and chief operating officer, and Keith Power, chief financial officer. The firm is recruiting additional investment and operating professionals.

Balson was expected to launch a new firm shortly after he left Bain Capital, according to a 2014 article in the New York Times. However, his plans got pushed back after he joined an organization called Match Beyond, which helps low-income young adults in Boston obtain college degrees and employment. He joined the organization as chief executive in January 2015.

Several other firms have raised money through funds that have longer lives than the traditional 10- to 12-year life of a private equity fund.

Altas Partners last year closed its $1 billion debut fund, which can hold companies as long as 17 years. CVC Capital last year was reportedly close to raising a $5 billion fund with a 15-year term.

Carlyle Group last year held a final close on $3.6 billion for its long-dated fund, Carlyle Global Partners, and Blackstone Group earlier this year reached $5 billion for a vehicle that has a 20-year life.

Action Item: Check out Cove Hill’s Form ADV here: http://bit.ly/2vPDp28

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