Los Angeles has a new home-grown private equity player looking to tap deal flow from the lower middle market.
Angeles Equity Partners has closed its inaugural $360 million fund, according to a statement released by the Brentwood firm last week. The private equity shop had initially targeted $300 million in capital commitments, but a late flurry of investor interest meant the fund wound up being oversubscribed, according to Tim Meyer and Jordan Katz, co-founders and managing partners.
“We were actually supposed to wrap the fund in October 2016, and we were already past our target then, but we had two large institutional investors from overseas who also wanted in,” said Meyer, who noted the pair pushed back the closing until January in order to accommodate the final backers.
More than a quarter of Angeles’ fund comes from foreign investors. The firm also received capital contributions from a variety of market segments including private institutional investors, university endowments, and public pension funds. While most of the investors are confidential, the group includes at least one local public pension fund, the Los Angeles City Employees Retirement System.
Meyer and Katz both previously worked at Gores Group of Beverly Hills, where for a decade they co-led a team focused on the industrial sector. The pair split from Gores in early 2014 to launch Angeles and started raising capital in October of that year. The firm has seven team members, including the co-founders as well as a six-member advisory panel made up of executives Meyer and Katz met while working at Gores.
Angeles’ focus will skew heavily toward the co-founders’ experience in the industrial sector. However, deals will probably not reach the nine-figure heights frequented by their previous employer. Meyer and Katz said that strategy will give Angeles’ investors more bang for their buck.
“Our attention is on the lower middle market where we think there’s more deal flow and companies that have greater operational opportunities,” said Katz.
Angeles made two acquisitions before its fund closed with the hopes of proving its philosophy is sound. One of the transactions included the purchase of a controlling stake in Moorpark-based ERP Power, which makes LED lighting power supplies. Katz and Meyer said that while industrial deal opportunities in Los Angeles are somewhat limited, their strong ties to the local business and private equity communities would allow them to sniff out those that do come along.
“We like to think we’re reasonably well plugged into the L.A. community,” Katz said. “I’ve worked here for 25 years and have long-standing relationships and have already been able to source (the ERP) deal based exactly on these relationships.”
Angeles used Moelis & Co. and GCA Advisors as placement agents for its inaugural fund. C. David Lee, a partner at downtown’s Munger Tolles & Olson, led the legal team.
