Pacific Avenue Capital Partners LLC, a Hermosa Beach-based private equity firm specializing in middle-market corporate divestitures, closed its first fund with aggregate commitments of more than half a billion dollars.
Chris Sznewajs, founder and managing partner of Pacific Avenue, attributed the fund’s success – despite tough economic headwinds – to the firm’s clear strategy, team quality and solid reputation among investors.
Sznewajs said the firm currently is focused on “buying assets from unnatural owners” – later clarified by a company spokesperson to refer to non-core assets for corporate sellers – “and then driving operational improvement.”
“We perform complex buyouts of businesses that are underperforming and neglected, but not distressed; these are high-quality, mission-critical businesses with the opportunity to unlock untapped value through operational improvement, capital investment, and accelerated growth,” Sznewajs wrote in an email.
The firm announced this month that the fund was significantly oversubscribed at its hard cap, including commitments from a diverse group including insurance companies, consultants, endowments and family offices, among other global investors.
Sznewajs also highlighted the strong performance of Pacific Avenue’s merger and acquisition operations, noting he believes the firm’s “strategy plays in all markets, but certainly as valuations have compressed and liquidity leaves the market it has been favorable for Pacific Avenue Capital.”
According to Pacific Avenue, the company takes a collaborative approach in partnering with strong management teams to drive lasting and strategic change.
Members of the Pacifica Avenue team have closed more than 65 transactions, including more than 35 corporate divestitures, across a multitude of industries throughout their combined careers, the company added.
Sznewajs said the fund will allow Pacific Avenue to continue its emphasis on corporate divestitures “and other complex situations to create value for its stakeholders.”
Currently employing around 20 employees in and around its Hermosa Beach office, Sznewajs said Pacific Avenue is actively recruiting team members to build value “on both the M&A side and the operational side.”
‘We win with talent and will always look to add top talent should they be available. I would expect that our team will double over the next couple of years as Pacific Avenue scales,” said Sznewajs. “We strive to be the best place to work among private equity firms in Los Angeles. Our culture is predicated on a collaborative approach, deep humility and an appetite to win.”
To date, the fund has completed one platform investment, in the Minnesota-based sunflower seed supplier Sunrich Products LLC, and has executed an agreement to acquire its second platform, the Pennsylvania-based Resin Solutions, and its related product lines.
The three to-be-acquired product lines are “market leaders in functional additives” for use in adhesives, construction, golf balls, and other applications. Resin Solutions is expected to close in the second or third quarter, according to Pacific Avenue.
Lazard Frères & Co. LLC served as the exclusive placement advisor to the fund.
Weil, Gotshal & Manges LLP served as the fund’s legal counsel.
