Accord Capital Partners, a San Francisco-based investment manager and capital advisory business, has held a final close on its first commingled fund vehicle, Accord Catalyst Fund, PERE understands.
The firm raised $105 million in equity commitments from institutional investors, including pension funds, sovereign wealth funds and fund-of-funds. The firm entered the market with the fund in Q2 2020 and held a final close at the end of October this year. The prolonged marketing period was due in part to the challenging fundraising environment during the covid-19 pandemic, Desi Co, managing partner and co-founder of Accord, told PERE.
Accord is looking to provide growth capital to emerging managers and what Co described as “newly emerged” firms – those that have recently crossed the $2 billion assets under management mark. Such managers have found it more difficult to raise capital as investors have preferred to stick with existing managers, Co said. This creates good timing to be entering the market with these types of capital investments.
“We’re particularly excited about this year’s and next year’s vintage,” he said. “It’s a bit of a perfect storm.”
Accord began making growth investments in other firms in 2014, syndicating capital on a deal-by-deal basis. The fund structure allows Accord to increase its speed of execution, meaning the firm can spend more time sourcing deals rather than financing them. Co said having a ready pool of capital means executing an investment will take approximately half the time it previously required when the firm was using its syndication approach.
“It gives us a lot more credibility and certainty,” Co said.
Accord will not look to take majority stakes, instead writing smaller checks to participate in the firms’ growth. No investment will represent more than 25 percent of the fund, Co said, adding the sweet spot is between $5 million and $25 million. Accord has made five investments from the fund to date.
The investment strategy will be supported by Accord’s capital advisory business to create a one-stop-shop solution for managers. GPs want a package solution, meaning Accord can make investments in firms for which it could also help to raise capital and provide services post-investment.
When asked about the potential conflict of interest between its investment and capital advisory businesses, Co said that the firm is fully transparent with investors about the nature of its relationships with the managers it backs and advises. Accord informs investors about potential conflicts in a manager relationship and gets approval from those investors to progress with the relationship. He added that most of the capital for the fund came from new investors, rather than its syndication relationships.
Geographically, the fund’s investments will be focused on the US, Europe and the UK. Accord is targeting a mid-teens net IRR for the vehicle, Co said.