Shore Capital may raise institutional PE fund in 2014, 2015

For now, the Chicago-based healthcare focused PE firm is raising money deal-by-deal, Ishbia said. The firm currently has four special purpose vehicles with roughly $10 million to $15 million each, that it uses to make acquisitions.

Shore Capital draws from a base of investors that are mostly family offices, as well as three institutions that have the option to “opt in and opt out,” he said.

“We will evaluate a more traditional, institutional-based private equity fund in 2014 or 2015,” Ishbia said.

So far, Shore has made 11 investments, including in Sirona Infusion, Access I.V., ClearPath Diagnostics, HomeCare IV and RapidCare Clinic.

In August, the firm made its first exit when it sold SCP Physical Therapy – including Excel Rehabilitation Services, Quantum Physical Therapy and Michigan Rehabilitation Specialists of Davison, Mich – to ATI Physical Therapy. ATI is a portfolio company of KRG Capital Partners.

Earlier this month, the firm sold SCP Specialty Infusion, its home infusion therapy portfolio company, to AxelaCare Health Solutions. Axela is backed by Harvest Partners. With the sale, Shore stands to make 4x its money invested, a source said.

Shore Capital Partners Fund I will generate a 67 percent IRR with the deal, the person said.

Shore was started in 2009 by four PE executives, who were all in their late 20s or early 30s and had never worked together before, “but we were all friends,” Ishbia said.

The four co-founders all hail from larger PE firms.

Ishbia was at Valor Equity Partners, where he spent most of his time on healthcare investing. Partner Ryan Kelley was previously at Water Street Healthcare Partners,while Partner Mike Cooper worked at Wind Point Partners. John Hennegan, also a Shore Partner, came from Henry Crown & Co, the private investing firm for Chicago’s Crown family.

As the firm launched in the midst of the financial crisis, it decided to begin investing instead of spending a year or longer raising a fund, Ishbia said. “We believe in 2009 it was a challenging time to fundraise,” he said.

Named after Lake Shore Drive in Chicago, Shore Capital targets an underserved market, Ishbia said. The PE firm invests in microcap healthcare companies with $1 million to $5 million of EBITDA.

“Being smaller allows us to invest in fragmented industries where larger investors cannot,” he said.

Luisa Beltran is a senior reporter for peHUB