Omaha Beach raises 80 pct of $30 mln target for `young secondaries’

  • Florida-based firm backs GPs facing turnover, performance issues
  • Waits to commit until after fund is partially deployed
  • “We love the unloved,” says co-founder Eric Fishman

Omaha Beach Capital is raising $30 million to invest in the funds of “unloved” general partners and is 80 percent on the way to the target, co-founder Eric Fishman told Buyouts.

The Aventura, Florida, firm commits to private-equity funds when they are 25 to 60 percent invested, typically securing its allocation as part of the vehicles’ final close. Omaha Beach’s strategy, which Fishman dubbed “young secondaries,” tends to work best with commitments to GPs facing problems like staff turnover or underperformance in a previous fund.

These complications are a turn-off for many limited partners, Fishman said. But by waiting to commit to funds until they are 25 to 60 percent invested, Omaha Beach eliminates some of the traditional risks associated with investing in a blind pool, Fishman says.

As a result, a typical Omaha-Beach-backed GP tends to have “some hair on it, some blemish on it,” Fishman said. “We love the unloved. That’s part of our strategy: being contrarian within private equity.”

Omaha Beach — a simultaneous tribute to the D-Day invasion and to Omaha, Nebraska, native Warren Buffett — has already raised $24 million toward its debut’s target, Fishman said. To date, the firm has invested in two funds. The firm has also completed three co-investments, and it consults with certain family office LPs on co-investment strategies.

Omaha Beach will charge LPs a 1 percent management fee and take 10 percent carried interest over an 8 percent preferred return. The firm expects to hold a final close by June 30.

In addition to young secondaries, Omaha Beach can invest in traditional secondaries as well, though it has yet to execute on that strategy. In the current environment, “spreads are so tight there, we haven’t seen the value,” Fishman said.

Fishman’s description of young secondaries is different from a strategy known as early secondaries, in which a buyer acquires an LP’s stake in a fund that is in the early stages of deployment.

Fishman and Brian Zaratzian founded the firm in January 2015. Prior to launching Omaha Beach, the co-founders worked together for eight years at hedge fund Khronos LLC.

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Photo Courtesy of Reuters